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Recovery and Resolution Regulations, 2015

120 Articles / Provisions · Malta
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Table of Provisions (120)

Preamble Reg. 1 Reg. 2 Interpretation. Reg. 3 Powers and duties of the Resolution Committee. Reg. 4 Reg. 5 Reg. 6 Assessment of recovery plans. Reg. 7 Group recovery plans. Reg. 8 Reg. 9 Recovery plan indicators. Reg. 10 Reg. 11 Information for the purpose of resolution plans and cooperation from the institution. Reg. 12 Reg. 13 Reg. 14 Reg. 15 Reg. 16 Assessment of resolvability for groups. Reg. 17 Reg. 18 Reg. 19 Reg. 20 Reg. 21 Reg. 22 Reg. 23 Reg. 24 Reg. 25 Reg. 26 Reg. 27 Reg. 28 Removal of the senior management and the board of directors. Reg. 29 Reg. 30 Coordination of early intervention measures and appointment of temporary administrator in relation to groups. Reg. 31 Reg. 32 Conditions for resolution and early intervention Reg. 33 Reg. 34 General principles governing resolution. Reg. 35 Special management. Reg. 36 Reg. 37 Reg. 38 Reg. 39 Reg. 40 Bridge institution tool. Reg. 41 Operation of a bridge institution. Reg. 42 Asset separation tool. Reg. 43 Reg. 44 Scope of bail-in tool. Reg. 45 Reg. 46 Reg. 47 Treatment of shareholders in bail-in or write- down or conversion of capital instruments. Reg. 48 Sequence of write-down and conversion. Reg. 49 Reg. 50 Rate of conversion of debt to equity. Reg. 51 Reg. 52 Reg. 53 Reg. 54 Reg. 55 Reg. 56 Government financial stabilisation tools. Reg. 57 Reg. 58 Temporary public ownership tool. Reg. 59 Requirement to write down or convert capital instruments. Reg. 60 Reg. 61 Reg. 62 Reg. 63 Reg. 64 Reg. 65 Reg. 66 Power to enforce crisis management measures or crisis prevention measures by other Member States. Reg. 67 Reg. 68 Exclusion of certain contractual terms in early intervention and resolution. Reg. 69 Reg. 70 Power to restrict the enforcement of security interests. Reg. 71 Power to temporarily suspend termination rights. Reg. 72 Exercise of the resolution powers. Reg. 73 Reg. 74 Reg. 75 Safeguard for shareholders and creditors. Reg. 76 Safeguard for counterparties in partial transfers. Reg. 77 Reg. 78 Protection for security arrangements. Reg. 79 Reg. 80 Reg. 81 Reg. 82 Reg. 83 Reg. 84 Reg. 85 Right to challenge decisions. Reg. 86 Restrictions on other proceedings. Reg. 87 Reg. 88 Resolution colleges. Reg. 89 European resolution colleges. Reg. 90 Reg. 91 Reg. 92 Reg. 93 Agreements with third countries. Reg. 94 Recognition and enforcement of third-country resolution proceedings. Reg. 95 Right to refuse recognition or enforcement of third-country resolution proceedings. Reg. 96 Reg. 97 Cooperation with third- country authorities. Reg. 98 Reg. 99 European system of financing arrangements. Reg. 100 Requirement to establish resolution financing arrangements. Reg. 101 Use of the resolution financing arrangements. Reg. 102 Reg. 103 Reg. 104 Extraordinary ex-post contributions. Reg. 105 Reg. 106 Reg. 107 Mutualisation of national financing arrangements in the case of a group resolution. Reg. 108 Ranking of deposits in insolvency hierarchy. Reg. 109 Use of deposit guarantee schemes in the context of resolution. Reg. 110 Offences. Reg. 111 Reg. 112 Reg. 113 Reg. 114 Reg. 115 Reg. 116 Exchange of information on penalties and maintenance of a central database. Reg. 117 Effective application of penalties and exercise of powers to impose penalties. Reg. 118 Right of appeal. Reg. 119 Cooperation with EBA.

Statutory Text (120 Articles)

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Preamble — Recovery and Resolution Regulations, 2015 Open official source

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 19,475, 18 ta’ Settembru, 2015

L.N. 301 of 2015

MALTA FINANCIAL SERVICES AUTHORITY ACT

(CAP. 330)

Recovery and Resolution Regulations, 2015

IN exercise of the powers conferred by article 20A and 20D of

the Malta Financial Services Authority Act, the Minister for Finance,

acting on the advice of the Malta Financial Services Authority and of

the Resolution Authority, respectively, has made the following

regulations:-

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 1 — Recovery and Resolution Regulations, 2015 Open official source

(1) The title of these regulations is the Recovery and Citation, scope

and

Resolution Regulations, 2015.

commencement.

(2) The purpose of these regulations is to implement Directive

2014/59/EU of the European Parliament and of the Council of 15

May 2014 establishing a framework for the recovery and resolution of

credit institutions and investment firms and amending Council

Directive 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 2004/25/

EC, 2005/56/EC, 2007/36/EC and 2011/35/EU, 2012/30/EU and

2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/

2012, of the European Parliament and of the Council.

(3) These regulations lay down rules and procedures relating

to the recovery and resolution of entities

Provided that when establishing and applying the

requirements of these regulations, and when using the different tools

at their disposal in relation to an entity, and subject to specific

provisions, the Resolution Committee and the Authority shall take

account of the nature of its business, its shareholding structure, its

legal form, its profile, size and legal status, its interconnectedness to

other institutions or to the financial system in general, the scope and

the complexity of its activities, its membership of an institutional

protection scheme (IPS) that meets the requirements of Article 113(7)

of the CRR or other cooperative mutual solidarity systems as referred

to in Article 113(6) of that Regulation and whether it exercises any

investment services or activities as defined in paragraph (2) of Article

4(1) of Directive 2014/65/EU.

(4) The provisions of regulation 32(5) shall come into force on

such date as the Minister for Finance may, by notice in the Gazette,

establish.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 2 Interpretation. — Recovery and Resolution Regulations, 2015 Open official source

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Malta Financial Services Authority Act;

"the BRRD" means Directive 2014/59/EU of the European

Parliament and of the Council of 15th May 2014 establishing a

framework for the recovery and resolution of credit institutions and

investment firms and amending Council Directive 82/891/EEC, and

Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/

36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations

(EU) No 1093/2010 and (EU) No 648/2012, as amended from time to

time, and includes any implementing measures, implementing

technical standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued thereunder;

"the CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of credit

institutions and investment firms, amending Directive 2002/87/EC

and repealing Directives 2006/48/EC and 2006/49/EC, as amended

from time to time, and includes any implementing measures that have

been or may be issued thereunder;

"the CRR" means Regulation (EU) No 575/2013 of the

European Parliament and of the Council of 26 June 2013 on

prudential requirements for credit institutions and investment firms

and amending Regulation (EU) No 648/2012, as amended from time

to time, and includes any implementing measures that have been or

may be issued thereunder;

"Additional Tier 1 instruments" means capital instruments that

meet the conditions laid down in Article 52(1) of the CRR;

"affected creditor" means a creditor whose claim relates to a

liability that is reduced or converted to shares or other instruments of

ownership by the exercise of the write-down or conversion power

pursuant to the use of the bail-in tool;

"aggregate amount" means the aggregate amount by which the

Resolution Committee has assessed that eligible liabilities are to be

written down or converted, in accordance with regulation 46(1);

"appropriate authority" means the Authority or the Resolution

Committee, as the case may be;

"asset management vehicle" means a legal person that meets the

requirements laid down in regulation 42(2);

"asset separation tool" means the mechanism for effecting a

transfer by a Resolution Committee of assets, rights or liabilities of an

institution under resolution to an asset management vehicle in

accordance with regulation 42;

"the Authority" means the Malta Financial Services Authority

established under the Act;

"back-to-back transaction" means a transaction entered into

between two group entities for the purpose of transferring, in whole

or in part, the risk generated by another transaction entered into

between one of those group entities and a third party;

"bail-in tool" means the mechanism for effecting the exercise by

the Resolution Committee of the write-down and conversion powers

in relation to liabilities of an institution under resolution in

accordance with regulation 43;

"branch" has the same meaning as that assigned to it in point

(17) of Article 4(1) of the CRR;

"bridge institution" means a legal person that meets the

requirements laid down in regulation 40(2);

"bridge institution tool" means the mechanism for transferring

shares or other instruments of ownership issued by an institution

under resolution or assets, rights or liabilities of an institution under

resolution to a bridge institution, in accordance with regulation 40;

"business day" means a day other than a Saturday, a Sunday or a

public holiday in Malta;

"Central Bank" means the Central Bank of Malta as defined by

the Central Bank of Malta Act;

"central counterparty" has the same meaning as that assigned to

it in point (1) of Article 2 of Regulation (EU) No 648/2012;

"Common Equity Tier 1 instruments" means capital instruments

that meet the conditions laid down in Article 28(1) to (4), Article

29(1) to (5) or Article 31(1) of the CRR;

"company" means a limited liability company constituted in

Malta in accordance with the Commercial Partnerships Ordinance * or

the Companies Act, or any law which may from time to time be in Cap. 386.

force, or a company registered, licensed or holding an equivalent

*Repealed by Act XXV of 1995 (Chapter 386).

authorisation in another country outside Malta under the laws of any

country provided that such company, if not constituted in Malta,

would qualify to be so registered or licensed under the laws of Malta;

"conditions for resolution" means the conditions referred to in

regulation 32(1);

"consolidated basis" means the basis of the consolidated

situation as defined in point (47) of Article 4(1) of the CRR;

"consolidating supervisor" means consolidating supervisor as

defined in point (41) of Article 4(1) of the CRR;

"conversion rate" means the factor that determines the number

of shares or other instruments of ownership into which a liability of a

specific class will be converted, by reference either to a single

instrument of the class in question or to a specified unit of value of a

debt claim;

"core business lines" means business lines and associated

services which represent material sources of revenue, profit or

franchise value for an institution or for a group of which an institution

forms part;

"covered bond" means an instrument as referred to in Article

52(4) of Directive 2009/65/EC of the European Parliament and of the

Council of 13 July 2009 on the coordination of laws, regulations and

administrative provisions relating to undertakings for collective

investment in transferable securities (UCITS), as amended from time

to time, including any implementing measures that have been or may

be issued thereunder;

"covered deposits" means covered deposits as defined in point

(5) of Article 2(1) of Directive 2014/49/EU;

"credit institution" shall have the same meaning as that assigned

to it in point (1) of Article 4(1) of the CRR, with the exception of

those entities referred to in Article 2(5) of the CRD;

"crisis management measure" means a resolution action or the

appointment of a special manager under regulation 35 or a person

under regulation 51(2) or under regulation 72(1);

"crisis prevention measure" means the exercise of powers to

direct removal of deficiencies or impediments to recoverability under

regulation 6(6), the exercise of powers to address or remove

impediments to resolvability under regulations 17 or 18, the

application of an early intervention measure under regulation 27, the

appointment of a temporary administrator under regulation 29 or the

exercise of the write-down or conversion powers under regulation 59;

"critical functions" means activities, services or operations the

discontinuance of which is likely, in one or more Member States, to

lead to the disruption of services that are essential to the real economy

or to disrupt financial stability due to the size, market share, external

and internal interconnectedness, complexity or cross-border activities

of the institution or group, with particular regard to the

substitutability of those activities, services or operations;

"cross-border group" means a group having group entities

established in more than one Member State;

"debt instruments" referred to in paragraphs (g) and (j) of

regulation 63(1) means bonds and other forms of transferable debt,

instruments creating or acknowledging a debt, and instruments giving

rights to acquire debt instruments;

"deposit" means a sum of money paid-in on terms under which

it will be repaid, with or without interest or a premium and either on

demand or at a time or in circumstances agreed by or on behalf of the

person making the payment and the person receiving it;

"deposit guarantee scheme" means a deposit guarantee scheme

introduced and officially recognised by a Member State pursuant to

Article 4 of Directive 2014/49/EU;

"depositor" has the same meaning as that assigned to it in point

(6) of Article 2(1) of Directive 2014/49/EU;

"derivative" has the same meaning as that assigned to it in point

(5) of Article 2 of Regulation (EU) No 648/2012;

"Directive 2002/47/EC" means Directive 2002/47/EC of the

European Parliament and of the Council of 6 June 2002 on financial

collateral arrangements, as amended from time to time, and includes

any implementing measures that have been or may be issued

thereunder;

"Directive 2014/49/EU" means Directive 2014/49/EU of the

European Parliament and of the Council, of 16 April 2014, on deposit

guarantee schemes, as amended from time to time, and includes any

implementing measures that have been or may be issued thereunder;

"Directive 2014/65/EU" means Directive 2014/65/EU of the

European Parliament and of the Council, of 15 May 2014, on markets

in financial instruments and amending Directive 2002/92/EC and

Directive 2011/61/EU, as amended from time to time, and includes

any implementing measures that have been or may be issued

thereunder;

"Directive 97/9/EC" means Directive 97/9/EC of the European

Parliament and of the Council of 3 March 1997 on investor-

compensation schemes, as amended from time to time, and includes

any implementing measures that have been or may be issued

thereunder;

"Directive 98/26/EC" means Directive 98/26/EC of the

European Parliament and of the Council of 19 May 1998 on

settlement finality in payment and securities settlement systems, as

amended from time to time, and includes any implementing measures

that have been or may be issued thereunder;

"director" includes an individual occupying the position of

director of a company, by whatever name he may be called,

empowered to carry out substantially the same functions in relation to

the direction of the company as those carried out by a director and in

respect of a company registered, licensed or holding an equivalent

authorisation outside Malta includes a member of a local board or

agent or representative of that company;

"EBA" means the European Banking Authority established by

Regulation (EU) No 1093/2010;

"EEA State" means a State which is a contracting party to the

agreement on the European Economic Area signed at Oporto on the

2nd May, 1992 as amended by the Protocol signed at Brussels on the

17th March, 1993 and as amended by any subsequent acts;

"eligible deposits" has the same meaning as that assigned to it in

point (4) of Article 2(1) of Directive 2014/49/EU;

"eligible liabilities" means the liabilities and capital instruments

that do not qualify as Common Equity Tier 1, Additional Tier 1 or

Tier 2 instruments of an institution or entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in this sub-regulation and that

are not excluded from the scope of the bail-in tool by virtue of

regulation 44(2);

"emergency liquidity assistance" means the provision by a

central bank of central bank money, or any other assistance that may

lead to an increase in central bank money, to a solvent financial

institution, or group of solvent financial institutions, that is facing

temporary liquidity problems, without such operation being part of

monetary policy;

"entity" means

(a)

institutions that are established in the European

Union;

(b) financial institutions that are established in the

Union when the financial institution is a subsidiary of a credit

institution or investment firm, or of a company referred to in

paragraph (c) or (d), and is covered by the supervision of the

parent undertaking on a consolidated basis in accordance with

Articles 6 to 17 of the CRR;

(c)

financial holding companies, mixed financial

holding companies and mixed-activity holding companies that

are established in the Union;

(d) parent financial holding companies in a Member

State, Union parent financial holding companies, parent mixed

financial holding companies in a Member State, Union parent

mixed financial holding companies;

(e)

branches of institutions that are established outside

the European Union in accordance with the specific conditions

laid down in this regulation;

"ESRB" means the European Systemic Risk Board established

by Regulation (EU) No 1092/2010;

"European Central Bank" means the European Central Bank

established in accordance with Article 13 of the Treaty on European

Union;

"European regulatory authority" means an authority which is

situated in a country or territory outside Malta that is in a Member

State and is empowered by law or regulation to supervise investment

firms or credit institutions;

"European resolution authority" means an authority which is

situated in a country or territory outside Malta that is in a Member

State and which exercises any function corresponding to the functions

of the Resolution Committee under these regulations;

"extraordinary public financial support" means State Aid within

the meaning of Article 107(1) of the Treaty on the Functioning of the

European Union, or any other public financial support at supra-

national level, which, if provided at national level, would constitute

State aid, that is provided in order to preserve or restore the viability,

liquidity or solvency of an institution or of an entity or of a group of

which such an institution or entity forms part;

"financial contracts" includes the following contracts and

(a)

securities contracts, including

(i) contracts for the purchase, sale or loan of a

security, a group or index of securities;

(ii)

options on a security or group or index of

securities;

(iii) repurchase or reverse repurchase transactions

on any such security, group or index;

(b)

commodities contracts, including

(i) contracts for the purchase, sale or loan of a

commodity or group or index of commodities for future

delivery;

(ii) options on a commodity or group or index of

commodities;

(iii) repurchase or reverse repurchase transactions

on any such commodity, group or index;

(c)

futures and forwards contracts, including contracts

(other than a commodities contract) for the purchase, sale or

transfer of a commodity or property of any other description,

service, right or interest for a specified price at a future date;

(d)

swap agreements, including

(i) swaps and options relating to interest rates;

spot or other foreign exchange agreements; currency; an

equity index or equity; a debt index or debt; commodity

indexes or commodities; weather; emissions or inflation;

(ii)

total return, credit spread or credit swaps;

(iii) any agreements or transactions that are

similar to an agreement referred to in paragraph (i) or (ii)

which is the subject of recurrent dealing in the swaps or

derivatives markets;

(e)

inter-bank borrowing agreements where the term of

the borrowing is three months or less;

(f)

master agreements for any of the contracts or

agreements referred to in paragraphs (a) to (e);

"financial holding company" means a financial holding

company as defined in point (20) of Article 4(1) of the CRR;

"financial institution" means a financial institution as defined in

point (26) of Article 4(1) of the CRR;

"financial instrument" shall have the same meaning as that

assigned to it in point (50) of Article 4(1) of the CRR;

"group" means a parent undertaking and its subsidiaries;

"group entity" means a legal entity that is part of a group;

"group financing arrangement" means the financing

arrangement or arrangements of the Member State of the group-level

resolution authority;

"group-level resolution authority" means the Resolution

Committee when Malta is the consolidating supervisor or the

resolution authority in the Member State in which the consolidating

supervisor is situated;

"group recovery plan" means a group recovery plan drawn up

and maintained in accordance with regulation 7;

"group resolution" means either of the following

(a)

the taking of resolution action at the level of a parent

undertaking or of an institution subject to consolidated

supervision, or

(b) the coordination of the application of resolution

tools and the exercise of resolution powers by the Resolution

Committee and the European resolution authorities concerned in

relation to group entities that meet the conditions for resolution;

"group resolution plan" means a plan for group resolution drawn

up in accordance with regulations 12 and 13;

"group resolution scheme" means a plan drawn up for the

purposes of group resolution in accordance with regulation 91;

"hybrid capital" means a form of debt that has been substituted

for equity;

"impaired asset" means an asset that is worth less on the market

than the value listed on an institutions balance sheet and which will

result in a write-down of that same asset account to the stated market

"institution" means a credit institution or an investment firm;

"institution under resolution" means an institution, a financial

institution, a financial holding company, a mixed financial holding

company, a mixed-activity holding company, a parent financial

holding company in a Member State, a Union parent financial holding

company, a parent mixed financial holding company in a Member

State, or a Union parent mixed financial holding company, in respect

of which a resolution action is taken;

"institutional protection scheme" or "IPS" means an

arrangement that meets the requirements laid down in Article 113(7)

of the CRR;

"instruments of ownership" means shares, other instruments that

confer ownership, instruments that are convertible into or give the

right to acquire shares or other instruments of ownership, and

instruments representing interests in shares or other instruments of

ownership;

"insurance undertaking" shall have the same meaning as that

assigned to it in point (5) of Article 4(1) of the CRR;

"intra-group guarantee" means a contract by which one group

entity guarantees the obligations of another group entity to a third

party;

"investment firm" has the same meaning as that assigned to it in

point (2) of Article 4(1) of the CRR that is subject to the initial capital

requirement of €730,000, excluding firms which are not authorised to

provide the investment service falling within points (3), (7) and (9) of

the First Schedule to the Investment Services Act;

"investor" means an investor within the meaning of point (4) of

Article 1 of Directive 97/9/EC of the European Parliament and of the

Council;

"Member State" means a Member State of the European Union

and includes an EEA State;

"micro, small and medium-sized enterprises" means micro,

small and medium-sized enterprises as defined with regard to the

annual turnover criterion referred to in Article 2(1) of the Annex to

Commission Recommendation 2003/361/EC;

"mixed-activity holding company" means a mixed-activity

holding company as defined in point (22) of Article 4(1) of the CRR;

"mixed financial holding company" means a mixed financial

holding company as defined in point (21) of Article 4(1) of the CRR;

"netting arrangement" means an arrangement under which a

number of claims or obligations can be converted into a single net

claim, including close-out netting arrangements under which, on the

occurrence of an enforcement event (however or wherever defined)

the obligations of the parties are accelerated so as to become

immediately due or are terminated, and in either case are converted

into or replaced by a single net claim, including ‘close-out netting

provisions’ as defined in point (n)(i) of Article 2(1) of Directive

2002/47/EC and ‘netting’ as defined in point (k) of Article 2 of

Directive 98/26/EC;

"normal insolvency proceedings" means collective insolvency

proceedings which entail the partial or total divestment of a debtor

and the appointment of a liquidator or an administrator normally

applicable to institutions under Maltese law and either specific to

those institutions or generally applicable to any natural or legal

person;

"overseas appropriate authority" means an authority of a

Member State identified in accordance with Article 61 of the BRRD

that is responsible under the national law of that State for making the

determinations referred to in regulation 59(3);

"own funds" means own funds as defined in point (118) of

Article 4(1) of the CRR;

"own funds requirements" means the requirements laid down in

regulations 92 to 98 of the CRR;

"parent financial holding company in a Member State" means a

parent financial holding company in a Member State as defined in

point (30) of Article 4(1) the CRR;

"parent institution in a Member State" means a parent institution

in a Member State as defined in point (28) of Article 4(1) of the CRR;

"parent mixed financial holding company in a Member State"

means a parent mixed financial holding company in a Member State

as defined in point (32) of Article 4(1)of the CRR;

"parent undertaking" means a parent undertaking as defined in

point (15)(a) of Article 4(1) of the CRR;

"recipient" means the entity to which shares, other instruments

of ownership, debt instruments, assets, rights or liabilities, or any

combination of those items are transferred from an institution under

resolution;

"recovery capacity" means the capability of an institution to

restore its financial position following a significant deterioration;

"recovery plan" means a recovery plan drawn up and maintained

by an institution in accordance with regulation 5;

"regulated market" has the same meaning as that assigned to it

in point (21) of Article 4(1) of Directive 2014/65/EU;

"Regulation (EU) No 1093/2010" means Regulation (EU) No

1093/2010 of the European Parliament and of the Council of 24

November 2010 establishing a European Supervisory Authority

(European Banking Authority), amending Decision No 716/2009/EC

and repealing Commission Decision 2009/78/EC, as amended from

time to time, and includes any implementing measures that have been

or may be issued thereunder;

"Regulation (EU) No 648/2012" means Regulation (EU) No

648/2012 of the European Parliament and of the Council of 4 July

2012 on OTC derivatives, central counterparties and trade

repositories, as amended from time to time, and includes any

implementing measures that have been or may be issued thereunder;

"relevant capital instruments" for the purposes of Section 5 of

Chapter IV of Title IV and Chapter V of Title IV of the BRRD, means

Additional Tier 1 instruments and Tier 2 instruments;

"relevant parent institution" means a parent institution in a

Member State, a Union parent institution, a financial holding

company, a mixed financial holding company, a mixed-activity

holding company, a parent financial holding company in a Member

State, a Union parent financial holding company, a parent mixed

financial holding company in a Member State, or a Union parent

mixed financial holding company, in relation to which the bail-in tool

is applied;

"relevant

third-country

authority"

means

an

authority

established in a third-country which is responsible for carrying out

functions comparable to those of the Resolution Committee or the

Authority pursuant to these regulations;

"resolution" means the application of a resolution tool or a tool

referred to in regulation 37(9) in order to achieve one or more of the

resolution objectives referred to in regulation 31(2);

"resolution action" means the decision to place an institution or

entity referred to in paragraphs (b), (c) or (d) of the definition "entity"

in this sub-regulation under resolution pursuant to regulations 32 or

33, the application of a resolution tool, or the exercise of one or more

resolution powers;

"resolution college" means a college established in accordance

with regulation 88 to carry out the tasks referred to in regulation

88(1);

"Resolution Committee" means the committee responsible for

recovery and resolution, as established in the Act;

"resolution objectives" means the resolution objectives referred

to in regulation 31(2);

"resolution plan" means a resolution plan for an institution

drawn up in accordance with regulation 10;

"resolution power" means a power referred to in regulations 63

to 72;

"resolution tool" means a resolution tool referred to in

regulation 37(3);

"sale of business tool" means the mechanism for effecting a

transfer by the Resolution Committee of shares or other instruments

of ownership issued by an institution under resolution, or assets,

rights or liabilities, of an institution under resolution to a purchaser

that is not a bridge institution, in accordance with regulation 38;

"secured liability" means a liability where the right of the

creditor to payment or other form of performance is secured by a

charge, pledge or lien, or collateral arrangements including liabilities

arising from repurchase transactions and other title transfer collateral

arrangements;

"senior management" means senior management as defined in

point (9) of Article 3(1) of the CRD;

"set-off arrangement" means an arrangement under which two

or more claims or obligations owed between the institution under

resolution and a counterparty can be set off against each other;

"significant branch" means a branch that would be considered as

significant in a host Member State in accordance with Article 51(1) of

the CRD;

"subsidiary" has the same meaning as that assigned to it in point

(16) of Article 4(1) of the CRR;

"supervisory college" means a college of

supervisors

established in accordance with Article 116 of the CRD;

"systemic crisis" means a disruption in the financial system with

the potential to have serious negative consequences for the internal

market and the real economy. All types of financial intermediaries,

markets and infrastructure may be potentially systemically important

to some degree;

"termination right" means a right to terminate a contract, a right

to accelerate, close out, set-off or net obligations or any similar

provision that suspends, modifies or extinguishes an obligation of a

party to the contract or a provision that prevents an obligation under

the contract from arising that would otherwise arise;

"third country" means a country that is not a Member State or an

EEA state;

"third-country institution" means an entity, the head office of

which is established in a third country, that would, if it were

established within the Union, be covered by the definition of an

institution;

"third-country parent undertaking" means a parent undertaking,

a parent financial holding company or a parent mixed financial

holding company, established in a third country;

"third-country regulatory authority" means an authority which is

in a country or territory that is not a Member State and is responsible

for carrying out functions comparable to those of the Authority

pursuant to these regulations;

"third-country resolution authority" means an authority which is

in a country or territory that is not a Member State and is responsible

for carrying out functions comparable to those of the Resolution

Committee pursuant to these regulations;

"third-country resolution proceedings" means an action under

the law of a third country to manage the failure of a third-country

institution or a third-country parent undertaking that is comparable, in

terms of objectives and anticipated results, to resolution actions under

these regulations;

"Tier 2 instruments" means capital instruments or subordinated

loans that meet the conditions laid down in Article 63 of the CRR;

"title transfer financial collateral arrangement" means a title

transfer financial collateral arrangement as defined in point (b) of

Article 2(1) of Directive 2002/47/EC;

"transfer powers" means the powers specified in paragraphs (c)

or (d) of regulation 63(1) to transfer shares, other instruments of

ownership, debt instruments, assets, rights or liabilities, or any

combination of those items from an institution under resolution to a

recipient;

"Union branch" means a branch located in a Member State of a

third-country institution;

"Union parent financial holding company" means an EU parent

financial holding company as defined in point (31) of Article 4(1) of

the CRR;

"Union parent institution" means an EU parent institution as

defined in point (29) of Article 4(1) of the CRR;

"Union parent mixed financial holding company" means an EU

parent mixed financial holding company as defined in point (33) of

Article 4(1) of the CRR;

"Union parent undertaking" means a Union parent institution, a

Union parent financial holding company or a Union parent mixed

financial holding company;

"Union State aid framework" means the framework established

by Articles 107, 108 and 109 of the Treaty on the Functioning of the

European Union and regulations and all Union acts, including

guidelines, communications and notices, made or adopted pursuant to

Article 108(4) or Article 109 of the Treaty on the Functioning of the

European Union;

"Union subsidiary" means an institution which is established in

a Member State and which is a subsidiary of a third-country

institution or a third-country parent undertaking;

"winding up" means the realisation of assets of an institution or

entity referred to in paragraphs (b), (c) or (d) of the definition "entity"

in this sub-regulation;

"write-down and conversion powers" means the powers referred

to in regulation 59(2) and in paragraphs (e) to (i) of regulation 63(1).

(2) Words and expressions used in these regulations which are

also used in the Act but which are not defined herein, shall have the

same meaning assigned to them as in the Act.

(3) These regulations shall apply to

(a)

institutions that are established in the European

Union;

(b) financial institutions that are established in the

Union when the financial institution is a subsidiary of a credit

institution or investment firm, or of a company referred to in

paragraphs (c) and (d), and is covered by the supervision of the

parent undertaking on a consolidated basis in accordance with

Articles 6 to 17 of the CRR;

(c)

financial holding companies, mixed financial

holding companies and mixed-activity holding companies that

are established in the European Union;

(d) parent financial holding companies in a Member

State, Union parent financial holding companies, parent mixed

financial holding companies in a Member State, Union parent

mixed financial holding companies;

(e)

branches of institutions that are established outside

the Union in accordance with the specific conditions laid down

in these regulations.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 3 Powers and duties of the Resolution Committee. — Recovery and Resolution Regulations, 2015 Open official source

(1

It shall be the duty of the Resolution Committee to

carry out the functions and duties assigned to it by the Act and these

regulations. The Resolution Committee shall be empowered to apply

the resolution tools and exercise the resolution powers.

(2) The Resolution Committee shall have the power to

(a)

remove and replace the senior management and

directors and recover monies from responsible persons;

(b) appoint a temporary administrator to take control of

and manage the affected institution with the objective of

restoring the institution, or parts of its business, to ongoing and

sustainable viability;

(c)

require, where necessary, the adoption of

appropriate measures such as a change to an institution’s

business practices, structure or organization;

(d) operate and resolve the institution, including

terminating contracts, continuing or assigning contracts,

purchase or sell assets, write-down debt and take any other

action necessary to restructure or wind down the institution’s

operations;

(e)

ensure continuity of critical services and functions

by requiring other companies in the same group to continue to

provide essential services to the entity in resolution, any

successor or an acquiring entity;

(f)

ensure that the residual entity in resolution can

temporarily provide critical services to a successor or an

acquiring entity or procuring necessary services from

unaffiliated third parties;

(g) override rights of shareholders of the institution in

resolution, including the requirement for approval by

shareholders of particular transactions in order to permit a

merger, acquisition, sale of substantial business operations,

recapitalization or other measures to restructure and dispose of

the institution’s business or its liabilities and assets;

(h) transfer or sell assets and liabilities, legal rights and

obligations, including deposit liabilities and ownership in

shares, to a solvent third party, notwithstanding any

requirements for consent or novation that would otherwise

apply;

(i)

make a rapid valuation of assets and liabilities of a

failing entity;

(j)

establish a temporary bridge institution to take over

and continue operating certain critical functions and viable

operations of a failed institution;

(k) establish a separate asset management vehicle and

transfer to the vehicle for management and run-down non-

performing loans or difficult-to-value assets;

(l)

carry out bail-in within resolution as a means to

achieve or help achieve continuity of critical functions either by

recapitalizing the entity that is no longer viable, or by

capitalizing a newly established entity or bridge institution to

which these functions have been transferred following closure

of the non-viable institutions;

(m) temporarily stay the exercise of early termination

rights that may otherwise be triggered upon entry of an

institution into resolution or in connection with the use of

resolution powers;

(n) impose a moratorium with a suspension of payments

to unsecured creditors and customers, other than for payments

and property transfers to central counterparties and those

entered into the payment, clearing and settlement systems, and

to stay on creditor actions to attach assets or otherwise collect

money or property from the institution, while protecting the

enforcement of eligible netting and collateral arrangements;

(o) ensure that the ‘no creditor worse off principle’ is

respected;

(p) effect the closure and orderly wind-up of the whole

or part of a failing institution with timely pay out or transfer of

insured deposits and prompt access to transaction accounts and

to safeguard client funds.

(3) For the purposes of this regulation, the Resolution

Committee shall adopt and make public any necessary relevant

internal rules, including rules regarding professional secrecy and

information exchanges between the different functional areas.

(4) The Resolution Committee shall cooperate closely with the

Authority in the preparation, planning and application of resolution

decisions.

(5) The Resolution Committee shall seek the approval, in

writing, of the Ministry responsible for Finance prior to taking any

decisions that may have a direct fiscal impact or which have systemic

implications. The Resolution Committee shall inform the Minister

responsible for finance of any decisions taken pursuant to the Act

where transposing the BRRD or to these regulations.

(6) Any decisions taken by the Authority and the Resolution

Committee in accordance with the Act transposing the BRRD and

these regulations, shall take into account the potential impact of such

a decision in all the Member States where the institution or the group

operates and shall minimise the negative effect on the financial

stability and negative economic and social effects in those Member

States.

(7) The Resolution Committee shall have the expertise,

resources and operational capacity to apply resolution actions, and

shall be able to exercise its powers with the speed and flexibility that

is necessary to achieve the resolution objectives.

(8) The Resolution Committee shall inform the EBA of its

specific functions and responsibilities.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 4 — Recovery and Resolution Regulations, 2015 Open official source

(1) Having regard to the impact that the failure of an Simplified

institution could have, due to the nature of its business; its obligations

certain

shareholding structure; its legal form; its risk profile, size and legal institutions.

status; its interconnectedness to other institutions or to the financial

system in general; the scope and the complexity of its activities; its

membership of an IPS or other cooperative mutual solidarity systems

as referred to in Article 113(7) of the CRR and any exercise of

investment services or activities as defined in point (2) of Article 4(1)

of Directive 2014/65/EU, and whether its failure and subsequent

winding up under normal insolvency proceedings would be likely to

have a significant negative effect on financial markets, on other

institutions, on funding conditions, or on the wider economy, the

Authority and the Resolution Committee shall determine

(a)

the contents and details of recovery and resolution

plans provided for in regulations 5 to 12;

(b) the date by which the first recovery and resolution

plans are to be drawn up and the frequency for updating

recovery and resolution plans which may be lower than that

provided for in regulation 5(2), regulation 7(5), regulation 10(6)

and regulation 13(5);

(c)

the contents and details of the information required

from institutions as provided for regulation 5(5) and (6),

regulation 11(1) and regulation 12(2) and in Sections A and B of

the Schedule to these regulations;

(d) the level of detail for the assessment of resolvability

provided for in regulations 15 and 16, and Section C of the

Schedule to these regulations.

(2) The Authority and the Resolution Committee shall make

the assessment referred to in sub-regulation (1) following

consultation with the Central Bank.

(3) Where the Authority or the Resolution Committee apply

simplified obligations on an institution, the Authority or the

Resolution Committee may still, where relevant, impose full, non-

simplified obligations at any time

Provided that where simplified obligations are imposed,

the application of simplified obligations shall not, in itself, affect the

Authority’s and, where relevant, the Resolution Committee’s powers

to take a crisis prevention measure or a crisis management measure.

(4) The Authority and the Resolution Committee shall inform

the EBA of the way sub-regulations (1), (5), (6) and (7) have been

applied to institutions licensed under the Banking Act and Investment

Services Act.

(5) Subject to sub-regulations (6) and (7), the Authority, and

where relevant, the Resolution Committee may waive the application

of

(a)

the requirements of regulations 5 to 14 to

institutions affiliated to a central body and wholly or partially

exempted from prudential requirements in accordance with

Article 10 of the CRR;

(b) the requirements of regulations 5 to 9 to institutions

which are members of an IPS.

(6) (a)

Where a waiver pursuant to sub-regulation (5) is

granted, the Authority, or where relevant, the Resolution Committee

shall

(i) apply the requirements of regulations 5 to 14

on a consolidated basis to the central body and institutions

affiliated to it within the meaning of Article 10 of the

CRR;

(ii) require the IPS to fulfil the requirements of

regulations 5 to 9 in cooperation with each of its waived

members.

(b) For the purpose of this sub-regulation, any reference

in regulations 5 to 14 to a group shall include a central body and

institutions affiliated to it within the meaning of Article 10 of the

CRR and their subsidiaries, and any reference to parent undertakings

or institutions that are subject to consolidated supervision pursuant to

regulation 3 of the Supervisory Consolidation Regulations, shall

include the central body.

(7) (a)

Institutions subject to direct supervision by the

European Central Bank pursuant to Article 6(4) of Council

Regulation (EU) No 1024/2013 of 15 October 2013 conferring

specific tasks on the European Central Bank concerning policies

relating to the prudential supervision of credit institutions or which

constitutes a significant share in the financial system of Malta shall

draw up their own recovery plans in accordance with regulations 5 to

9 and shall be the subject to individual resolution plans in accordance

with regulations 10 to 14.

(b) For the purposes of this sub-regulation, the

operations of an institution shall be considered to constitute a

significant share of Malta’s financial system if any of the following

conditions are met

(i) the total value of its assets exceeds EUR 30

000 000 000; or

(ii) the ratio of its total assets over the GDP of

Malta exceeds 20%, unless the total value of its assets is

below EUR 5 000 000 000.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 5 — Recovery and Resolution Regulations, 2015 Open official source

(1) An institution, that is not part of a group subject to Recovery plans.

consolidated supervision pursuant to regulations 3 and 4 of the

Supervisory Consolidation Regulations, shall draw up and maintain a S.L. 371.15

recovery plan providing for measures to be taken by the institution to

restore its financial position following a significant deterioration of

its financial situation. Recovery plans shall be considered to be a

governance arrangement within the meaning of article 17B of the

Banking Act for credit institutions and the Investment Services Rules Cap. 371.

for Investment Services Providers for investment firms.

(2) Institutions shall update their recovery plans at least

annually or after a change to the legal or organisational structure of

the institution, its business or its financial situation, which could have

a material effect on, or necessitates a change to, the recovery plan.

The Authority may require institutions to update their recovery plans

more frequently.

(3) Recovery plans shall not assume any access to or receipt of

extraordinary public financial support.

(4) Recovery plans shall include, where applicable, an

analysis of how and when an institution may apply for the use of

central bank facilities, subject to the conditions addressed by the plan,

and identify those assets which would be expected to qualify as

collateral.

(5) Without prejudice to regulation 4, the Authority shall

ensure that the recovery plans include the information listed in

Section A of the Schedule to these regulations, and any other

additional information which may be required by the Authority on a

case by case basis.

(6) Recovery plans shall also include possible measures which

could be taken by the institution where the conditions for early

intervention under regulation 27 are met.

(7) Recovery plans shall include appropriate conditions and

procedures to ensure the timely implementation of recovery actions as

well as a wide range of recovery options, and shall contemplate a

range of scenarios of severe macroeconomic and financial stress

relevant to the institution’s specific conditions, including system-

wide events and stress, specific to individual legal persons and to

groups.

(8) The Authority may require an institution to maintain

detailed records of financial contracts to which the institution

concerned is a party to.

(9) The board of directors of an institution shall assess and

approve the recovery plan before submitting it to the Authority.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 6 Assessment of recovery plans. — Recovery and Resolution Regulations, 2015 Open official source

(1) Institutions required to draw up recovery plans

under regulation 5(1) and regulation 7(1) shall submit the recovery

plans to the Authority for review. The institution shall demonstrate to

the satisfaction of the Authority that those plans meet the criteria set

out in sub-regulation (2).

(2) The Authority shall, within six months from the submission

of each recovery plan, and after consulting the relevant European

regulatory authorities where significant branches are located, review

it and assess the extent to which it satisfies the requirements laid

down in regulation 5 and the following criteria

(a)

the implementation of the arrangements proposed in

the plan is reasonably likely to maintain or restore the viability

and financial position of the institution or of the group, taking

into account the preparatory measures that the institution has

taken or has planned to take;

(b) the plan and specific options within the plan are

reasonably likely to be implemented quickly and effectively in

situations of financial stress and avoiding to the maximum

extent possible any significant adverse effect on the financial

system, including in scenarios which would lead other

institutions to implement recovery plans within the same period.

(3) When assessing the appropriateness of the recovery plans,

the Authority shall take into consideration the appropriateness of the

institution’s capital and funding structure to the level of complexity of

the organisational structure and the risk profile of the institution.

(4) The Authority shall provide the recovery plan to the

Resolution Committee. The Resolution Committee shall examine the

recovery plan with a view to identifying any actions in the recovery

plan which may adversely impact the resolvability of the institution

and make recommendations to the Authority with regard to those

matters.

(5) (a)

Where the Authority assesses that there are material

deficiencies in the recovery plan, or material impediments to its

implementation, it shall notify the institution or the parent

undertaking of the group of its assessment and require the institution

to submit, within two months, extendable with the Authority’s

approval by one month, a revised plan demonstrating how those

deficiencies or impediments are addressed

Provided that, before requiring an institution to resubmit a

recovery plan, the Authority shall give the institution the opportunity

to state its opinion on that requirement.

(b) Where the Authority does not consider the

deficiencies and impediments to have been adequately addressed by

the revised plan, it may direct the institution to make specific changes

to the plan.

(6) (a)

If the institution fails to submit a revised recovery

plan, or if the Authority determines that the revised recovery plan

does not adequately remedy the deficiencies or potential impediments

identified in its original assessment, and it is not possible to

adequately remedy the deficiencies or impediments through a

direction to make specific changes to the plan, the Authority shall

require the institution to identify within a reasonable time-frame

changes it can make to its business in order to address the deficiencies

in or impediments to the implementation of the recovery plan.

(b) If the institution fails to identify such changes

within the time-frame set by the Authority, or if the competent

authority assesses that the actions proposed by the institution would

not adequately address the deficiencies or impediments, the Authority

may direct the institution to take any measures it considers to be

necessary and proportionate, taking into account the seriousness of

the deficiencies and impediments and the effect of the measures on

the institution’s business.

(c)

The Authority may, without prejudice to regulation

9 of the Banking Act (Supervisory Review) Regulations and

regulation 16 of the Investment Services Act (Supervisory Review)

Regulations, direct the institution to

(i) reduce the risk profile of the institution,

including liquidity risk;

(ii)

enable timely recapitalisation measures;

(iii) review the institution’s strategy and structure;

(iv) make changes to the funding strategy so as to

improve the resilience of the core business lines and

critical functions;

(v) make changes to the governance structure of

the institution

Provided that such measures do not preclude the Authority

from taking additional measures under Maltese law.

(7) When the Authority requires an institution to take

measures according to sub-regulation 6, its decision on the measures

shall be reasoned and proportionate, and the decision shall be notified

in writing to the institution and shall be subject to a right of appeal.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 7 Group recovery plans. — Recovery and Resolution Regulations, 2015 Open official source

(1) Union parent undertakings shall draw up and submit

to the Authority, where it is the consolidating supervisor, a group

recovery plan. Group recovery plans shall consist of a recovery plan

for the group headed by the Union parent undertaking as a whole. The

group recovery plan shall identify measures that may be required to

be implemented at the level of the Union parent undertaking and each

individual subsidiary.

(2) In accordance with regulation 8, the Authority may require

subsidiaries to draw up and submit recovery plans on an individual

basis.

(3) The Authority where it is the consolidating supervisor

shall, provided that the confidentiality requirements laid down in

these regulations are in place, transmit the group recovery plans to

(a)

the relevant authorities referred to in regulations 6

and 7 of the Supervisory Consolidation Regulations;

(b) the European regulatory authorities where

significant branches are located insofar as is relevant to that

branch;

(c)

the group-level resolution authority; and

(d)

the European resolution authorities of subsidiaries.

(4) (a)

The group recovery plan shall aim to achieve the

stabilisation of the group as a whole, or any institution of the group,

when it is in a situation of stress so as to address or remove the causes

of the distress and restore the financial position of the group or the

institution in question, at the same time taking into account the

financial position of other group entities.

(b) The group recovery plan shall include arrangements

to ensure the coordination and consistency of measures to be taken at

the level of the Union parent undertaking, at the level of the entities

referred to in paragraphs (c) and (d) of the definition "entity" in

regulation 2(1), as well as measures to be taken at the level of

subsidiaries and, where applicable, in accordance with the CRD at the

level of significant branches.

(5) The group recovery plan, and any plan drawn up for an

individual subsidiary, shall include the elements specified in

regulation 5, and shall include, where applicable, arrangements for

intra-group financial support adopted pursuant to an agreement for

intra-group financial support that has been concluded in accordance

with regulations 19 to 26.

(6) Group recovery plans shall include a range of recovery

options setting out actions to address those scenarios provided for in

regulation 5(7)

Provided that for each of the scenarios, the group recovery

plan shall identify whether there are obstacles to the implementation

of recovery measures within the group, including at the level of

individual entities covered by the plan, and whether there are

substantial practical or legal impediments to the prompt transfer of

own funds or the repayment of liabilities or assets within the group.

(7) The board of directors of the entity drawing up the group

recovery plan pursuant to sub-regulation (1) shall assess and approve

the group recovery plan before submitting it to the Authority, where it

is the consolidating supervisor.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 8 — Recovery and Resolution Regulations, 2015 Open official source

(1)

The Authority shall

Assessment of

group recovery

plans.

(a)

where it is the consolidating supervisor, together

with the European regulatory authorities of subsidiaries; or

(b) where it is responsible for a subsidiary, together

with the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any,

after consulting the authorities referred to in regulation 7 of the

Supervisory Consolidation Regulations and with the European

regulatory authorities of significant branches insofar as is relevant to

the significant branch, review the group recovery plan and assess the

extent to which it satisfies the requirements and criteria laid down in

regulations 6 and 7. That assessment shall be made in accordance

with the procedure established in regulation 6 and with this regulation

and shall take into account the potential impact of the recovery

measures on financial stability in Malta and in all the Member States

where the group operates.

(2) The Authority shall endeavour to reach a joint decision

(a)

where it is the consolidating supervisor, together

with the European regulatory authorities of subsidiaries; or

(b) where it is responsible for a subsidiary, together

with the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any, on

(i) the review and assessment of the group

recovery plan;

(ii) whether a recovery plan on an individual

basis shall be drawn up for institutions that are part of the

group; and

(iii) the application of the measures referred to in

regulation 6(5) and (6)

Provided that the parties shall reach a joint decision within

four months from the date of the transmission by the consolidating

supervisor of the group recovery plan in accordance with regulation

7(3)

Provided further that the Authority may also request the

EBA to assist the authorities mentioned in this sub-regulation in

reaching a joint decision in accordance with Article 31(c) of

Regulation (EU) No 1093/2010.

(3) Where the Authority is the consolidating supervisor, in the

absence of a joint decision between the authorities mentioned in sub-

regulation (2) within four months of the date of transmission, on the

review and assessment of the group recovery plan or on any measures

the Union parent undertaking is required to take in accordance with

regulation 6(5) and (6), the Authority shall make its own decision

with regard to those matters. The Authority, where it is the

consolidating supervisor, shall make its decision having taken into

account the views and reservations of the relevant European

regulatory authorities expressed during the four-month period. The

Authority, where it is the consolidating supervisor shall notify the

decision to the Union parent undertaking and to the other relevant

European regulatory authorities

Provided that, if at the end of the four-month period, any of

the authorities referred to in sub-regulation (2) have referred a matter

mentioned in sub-regulation (7) to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Authority, where it

is the consolidating supervisor, shall defer its decision and await any

decision that the EBA may take in accordance with Article 19(3) of

that Regulation, and shall take its decision in accordance with the

decision of the EBA. The four-month period shall be deemed to be the

conciliation period within the meaning of Regulation (EU) No 1093/

2010. The matter shall not be referred to the EBA after the end of the

four-month period or after a joint decision has been reached. In the

absence of a decision by the EBA within one month, the decision of

the Authority as the consolidating supervisor shall apply.

(4) Where the Authority is responsible for the supervision of a

subsidiary, in the absence of a joint decision between the authorities

mentioned in sub-regulation (2) within four months of the date of

transmission on

(a)

whether a recovery plan on an individual basis is to

be drawn up for the institutions under its jurisdiction; or

(b) the application at subsidiary level of the measures

referred to in regulation 6(5) and (6),

the Authority shall make its own decision on that matter

Provided that, if at the end of the four-month period, any of

the European regulatory authorities concerned have referred a matter

mentioned in sub-regulation (7) to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Authority, where it

is responsible for the supervision of the subsidiary, shall defer its

decision and await any decision that the EBA may take in accordance

with Article 19(3) of that Regulation, and shall take its decision in

accordance with the decision of the EBA. The four-month period

shall be deemed to be the conciliation period within the meaning of

Regulation (EU) No 1093/2010. The matter shall not be referred to

the EBA after the end of the four-month period or after a joint

decision has been reached. In the absence of a decision made by the

EBA within one month, the decision of the Authority, where it is

responsible for the supervision of the subsidiary at an individual

level, shall apply.

(5) Where the Authority does not disagree with a decision

taken by a relevant European regulatory authority responsible for a

subsidiary in accordance with Article 8(4) of the BRRD, the

Authority and the other European regulatory authorities which did not

disagree with such a decision, may reach a joint decision on a group

recovery plan covering entities licensed in terms of the Banking Act

and the Investment Services Act , as well as those entities authorised

by the European regulatory authorities mentioned in this sub-

regulation.

(6) The joint decision referred to in sub-regulations (2) or (5)

and any decision taken by the European regulatory authorities in the

absence of a joint decision in accordance with Article 8(3) and (4) of

the BRRD shall be recognised as conclusive and shall be applied by

the Authority in Malta.

(7) The Authority may, within four months of the date of

transmission, request the EBA to assist the authorities mentioned in

sub-regulation (2) in reaching an agreement in accordance with

Article 19(3) of Regulation (EU) No 1093/2010, only in relation to

the assessment of recovery plans and implementation of the measures

of paragraphs (c)(i), (ii) and (iv) of regulation 6(6). The four-month

period shall be deemed to be the conciliation period within the

meaning of Regulation (EU) No 1093/2010. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision has been reached. In the absence of an EBA decision

within one month, the decisions of the European regulatory authority

acting as the consolidating supervisor taken in accordance with

Article 8(3) of the BRRD and, or, of the European regulatory

authorities responsible for subsidiaries taken in accordance with

Article 8(4) of the BRRD shall apply.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 9 Recovery plan indicators. — Recovery and Resolution Regulations, 2015 Open official source

(1) For the purpose of regulations 5 to 8, each recovery

plan shall include a framework of indicators established by the

institution which identifies the points at which appropriate actions

referred to in the plan may be taken.

(2) Such indicators shall be agreed upon by the Authority

when making the assessment of the recovery plans in accordance with

regulations 6 and 8.

(3) The indicators may be of a qualitative or quantitative

nature relating to the institution’s financial position and shall be

capable of being monitored easily.

(4) The Authority shall ensure that institutions put in place

appropriate arrangements for the regular monitoring of the indicators.

(5) Notwithstanding sub-regulations (1) to (4), an institution

may

(a)

take action under its recovery plan where the

relevant indicator has not been met, but where the board of

directors of the institution considers it to be appropriate in the

circumstances; or

(b) refrain from taking such action where the board of

directors of the institution does not consider it to be appropriate

in the circumstances of the situation.

(6) A decision to take an action referred to in the recovery plan

or a decision to refrain from taking such an action shall be notified to

the Authority without delay.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 10 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee, after consulting the Resolution

Authority and after consulting the European resolution authorities of plans.

the jurisdictions in which any significant branches are located insofar

as is relevant to the significant branch, shall draw up a resolution plan

for each institution that is not part of a group subject to consolidated

supervision pursuant to regulations 3 and 4 of the Supervisory S.L. 371.15

Consolidation Regulations. The resolution plan shall provide for the

resolution actions which the Resolution Committee may take where

the institution meets the conditions for resolution. Information

referred to in sub-regulation (7)(a) shall be disclosed to the institution

concerned.

(2) When drawing up the resolution plan, the Resolution

Committee shall identify any material impediments to resolvability

and, where necessary and proportionate, outline relevant actions for

how those impediments could be addressed, according to regulations

15 to 18.

(3) The resolution plan shall take into consideration relevant

scenarios including that the event of failure may be idiosyncratic or

may occur at a time of broader financial instability or system wide

events. The resolution plan shall not assume any of the following

(a)

extraordinary public financial support besides the

use of the financing arrangements established in accordance

with regulation 100;

(b)

any central bank emergency liquidity assistance; or

(c)

any central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate terms.

(4) The resolution plan shall include an analysis of how and

when an institution may apply, in the conditions addressed by the

plan, for the use of central bank facilities and shall identify those

assets which would be expected to qualify as collateral.

(5) The Resolution Committee may require institutions to

assist them in the drawing up and updating of the plans.

(6) Resolution plans shall be reviewed, and where appropriate

updated, at least annually and after any material changes to the legal

or organisational structure of the institution or to its business or its

financial position that could have a material effect on the

effectiveness of the plan or otherwise necessitates a revision of the

resolution plan

Provided that for the purpose of the revision or update of

the resolution plans referred to in this sub-regulation, the institutions

and the Authority shall promptly communicate to the Resolution

Committee any change that necessitates such revision or update.

(7) Without prejudice to regulation 4, the resolution plan shall

set out options for applying the resolution tools and resolution powers

referred to in Title IV of the BRRD to the institution. It shall include,

quantified whenever appropriate and possible

(a)

a summary of the key elements of the plan;

(b) a summary of the material changes to the institution

that have occurred after the latest resolution information was

filed;

(c)

a demonstration of how critical functions and core

business lines could be legally and economically separated, to

the extent necessary, from other functions so as to ensure

continuity upon the failure of the institution;

(d)

an estimation of the time-frame for executing each

material aspect of the plan;

(e)

a detailed description of the assessment of

resolvability carried out in accordance with sub-regulation (2)

and with regulation 15;

(f)

a description of any measures required pursuant to

regulation 17 to address or remove impediments to resolvability

identified as a result of the assessment carried out in accordance

with regulation 15;

(g) a description of the processes for determining the

value and marketability of the critical functions, core business

lines and assets of the institution;

(h) a detailed description of the arrangements for

ensuring that the information required pursuant to regulation 11

is up to date and at the disposal of the Resolution Committee at

all times;

(i)

an explanation by the Resolution Committee as to

how the resolution options could be financed without the

assumption of any of the following

(i) extraordinary public financial support besides

the use of the financing arrangements established in

accordance with regulation 100;

(ii) any

central

bank

emergency

liquidity

assistance; or

(iii) any central bank liquidity assistance provided

under non-standard collateralisation, tenor and interest rate

terms;

(j)

a detailed description of the different resolution

strategies that could be applied according to the different

possible scenarios and the applicable time-scales;

(k)

a description of critical interdependencies;

(l)

a description of options for preserving access to

payments and clearing services and other infrastructures and, an

assessment of the portability of clients positions;

(m) an analysis of the impact of the plan on the

employees of the institution, including an assessment of any

associated costs, and a description of envisaged procedures to

consult staff during the resolution process, taking into account

national systems for dialogue with social partners where

applicable;

(n)

a plan for communicating with the media and the

public;

(o) the minimum requirement for own funds and

eligible liabilities required pursuant to regulation 45(1) and a

deadline to reach that level, where applicable;

(p) where applicable, the minimum requirement for own

funds and contractual bail-in instruments pursuant to regulation

45(1), and a deadline to reach that level, where applicable;

(q) a description of essential operations and systems for

maintaining the continuous functioning of the institution’s

operational processes;

(r)

where applicable, any opinion expressed by the

institution in relation to the resolution plan.

(8) The Resolution Committee may require an institution and

an entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) to maintain detailed records of financial

contracts to which it is a party. The Resolution Committee may

specify a time-limit within which the institution or entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) is to be capable of producing those records. The same time-limit

shall apply to all institutions and all entities referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) under its

jurisdiction. The Resolution Committee may decide to set different

time-limits for different types of financial contracts as referred to in

the definition "financial contracts" under regulation 2(1). This sub-

regulation shall not affect the information gathering powers of the

Authority.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 11 Information for the purpose of resolution plans and cooperation from the institution. — Recovery and Resolution Regulations, 2015 Open official source

(1)

The Resolution Committee may require institutions

to

(a)

cooperate as much as necessary in the drawing up of

resolution plans;

(b) provide them, either directly or through the

Authority, with all of the information necessary to draw up and

implement resolution plans.

In particular the Resolution Committee may require,

among other information, the information and analysis specified in

Section B of the Schedule to these regulations.

(2) The Authority shall cooperate with the Resolution

Committee in order to verify whether some or all of the information

referred to in sub-regulation (1) is already available. Where such

information is available, the Authority shall provide that information

to the Resolution Committee.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 12 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall, in its capacity as Group

the group-level resolution authority, together with the European resolution plans.

resolution authorities of subsidiaries, or, in its capacity as the

resolution authority of a subsidiary, together with the European

resolution authority acting as the group-level resolution authority and

the European resolution authorities of other subsidiaries, if any, and

after consulting the European resolution authorities of significant

branches, insofar as is relevant to the significant branch, draw up

group resolution plans. Group resolution plans shall include a plan for

the resolution of the group headed by the Union parent undertaking as

a whole, either through resolution at the level of the Union parent

undertaking or through break up and resolution of the subsidiaries.

The group resolution plan shall identify measures for the resolution

of

(a)

the Union parent undertaking;

(b) the subsidiaries that are part of the group and that

are located in the European Union;

(c)

the entities referred to in paragraphs (c) and (d) of

the definition "entity" in regulation 2(1); and

(d) subject to Title VI of the BRRD, the subsidiaries

that are part of the group and that are located outside the

European Union.

(2) The group resolution plan shall be drawn up on the basis of

the information provided pursuant to regulation 11.

(3) The group resolution plan shall

(a)

set out the resolution actions to be taken in relation

to group entities, both through resolution actions in respect of

the entities referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1), the parent undertaking and

subsidiary institutions and through coordinated resolution

actions in respect of subsidiary institutions, in the scenarios

provided for in regulation 10(3);

(b) examine the extent to which the resolution tools and

powers could be applied and exercised in a coordinated way to

group entities established in the European Union, including

measures to facilitate the purchase by a third party of the group

as a whole, or separate business lines or activities that are

delivered by a number of group entities, or particular group

entities, and identify any potential impediments to a coordinated

resolution;

(c)

where a group includes entities incorporated in third

countries, identify appropriate arrangements for cooperation

and coordination with the relevant authorities of those third

countries and the implications for resolution within the

European Union;

(d) identify measures, including the legal and economic

separation of particular functions or business lines, that are

necessary to facilitate group resolution when the conditions for

resolution are met;

(e)

set out any additional actions, not referred to in

these regulations, which the group-level resolution authority

intends to take in relation to the resolution of the group;

(f)

identify how the group resolution actions could be

financed and, where the financing arrangement would be

required, set out principles for sharing responsibility for that

financing between sources of funding in different Member

States. The plan shall not assume any of the following

(i) extraordinary public financial support besides

the use of the financing arrangements established in

accordance with regulation 100;

(ii)

central bank emergency liquidity assistance;

or

(iii) central bank liquidity assistance provided

under non-standard collateralisation, tenor and interest rate

terms

Provided that those principles shall be set out on the basis

of equitable and balanced criteria and shall take into account, in

particular, regulation 107(5) and the impact on financial stability in

Malta and in all the Member States concerned.

(4) The assessment of the resolvability of the group under

Article 16 of the BRRD shall be carried out at the same time as the

drawing up and updating of the group resolution plan in accordance

with this regulation. A detailed description of the assessment of

resolvability carried out in accordance with Article 16 of the BRRD

shall be included in the group resolution plan.

(5) The group resolution plan shall not have a disproportionate

impact on any Member State.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 13 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee acts as the group- Requirement

level resolution authority, Union parent undertakings shall submit the and

for group

information that may be required in accordance with regulation 11 to resolution plans.

the Resolution Committee. That information shall concern the Union

parent undertaking and to the extent required, each of the group

entities including entities referred to in paragraphs (c) and (d) of the

definition "entity" in regulation 2(1).

(2) The Resolution Committee in its capacity as the group-

level resolution authority shall, provided that confidentiality

requirements laid down in these regulations are in place, transmit the

information provided in accordance with this regulation to

(a)

the EBA;

(b)

the Authority;

(c)

the European resolution authorities of subsidiaries;

(d) the European resolution authorities of the

jurisdictions in which significant branches are located insofar as

is relevant to the significant branch;

(e)

the relevant authorities referred to in regulations 6

and 7 of the Supervisory Consolidation Regulations; and

(f)

the European resolution authorities of the Member

States where the entities referred to in paragraphs (c) and (d) of

the definition "entity" in regulation 2(1) are established.

(3) The information provided by the Resolution Committee in

its capacity as the group-level resolution authority to the European

resolution authorities and European regulatory authorities of

subsidiaries, European resolution authorities of the jurisdiction in

which any significant branches are located, and to the relevant

authorities referred to in regulations 6 and 7 of the Supervisory S.L. 371.15

Consolidation Regulations, shall include as a minimum all

information that is relevant to the subsidiary or significant branch.

The information provided to the EBA shall include all information

that is relevant to the role of the EBA in relation to the group

resolution plans. In the case of information relating to third-country

subsidiaries, the Resolution Committee in its capacity as group-level

resolution authority shall not be obliged to transmit that information

without the consent of the relevant third-country authority.

(4) The Resolution Committee in its capacity as group-level

resolution authority, shall act jointly with the European resolution

authorities referred to in sub-regulation (1), in resolution colleges and

after consulting the Authority, where relevant, and the relevant

European regulatory authorities, including the European regulatory

authorities in which any significant branches are located, draw up and

maintain group resolution plans. The Resolution Committee in its

capacity as group-level resolution authority may, at its discretion, and

subject to it meeting the confidentiality requirements laid down in

regulation 98, involve in the drawing up and maintenance of group

resolution plans third-country resolution authorities of jurisdictions in

which the group has established subsidiaries or financial holding

companies or significant branches as referred to in Article 51 of the

CRD.

(5) Where the Resolution Committee is the group-level

resolution authority, it shall review and, where appropriate update,

group resolution plans, at least annually, and after any change to the

legal or organisational structure, to the business or to the financial

position of the group including any group entity, that could have a

material effect on or require a change to the plan.

(6) The adoption of the group resolution plan shall take the

form of a joint decision

(a)

where the Resolution Committee is the group-level

resolution authority, of the Resolution Committee and the

European resolution authorities of subsidiaries; or

(b) where the resolution authority is responsible for a

subsidiary, of the Resolution Committee, the European

resolution authority acting as the group-level resolution

authority, and the European resolution authorities of other

subsidiaries, if any

Provided that the joint decision shall be made within four

months of the date of the transmission by the group-level resolution

authority of the information referred to in sub-regulation (2)

Provided further that the Resolution Committee may also

request the EBA to assist the authorities mentioned in this sub-

regulation in reaching a joint decision in accordance with Article

31(c) of Regulation (EU) No 1093/2010.

(7) Where the Resolution Committee is the group-level

resolution authority, in the absence of a joint decision between the

Resolution Committee and the European resolution authorities of

subsidiaries within four months, the Resolution Committee shall

make its own decision on the group resolution plan. The decision

shall be fully reasoned and shall take into account the views and

reservations of the relevant European resolution authorities. The

decision shall be provided to the Union parent undertaking by the

Resolution Committee acting as the group-level resolution authority

Provided that, subject to Article 13(9) of the BRRD, where

the Resolution Committee is the group-level resolution authority, if,

at the end of the four-month period, any of the authorities mentioned

in sub-regulation (6) has referred the matter to the EBA in accordance

with Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee in its capacity as the group-level resolution authority shall

defer its decision and await any decision that the EBA may take in

accordance with Article 19(3) of that Regulation, and shall take its

decision in accordance with the decision of the EBA. The four-month

period shall be deemed to be the conciliation period within the

meaning of that Regulation. The matter shall not be referred to the

EBA after the end of the four-month period or after a joint decision

has been reached. In the absence of an EBA decision within one

month, the decision of the Resolution Committee in its capacity as the

group-level resolution authority shall apply.

(8) Where the Resolution Committee is responsible for a

subsidiary, in the absence of a joint decision between the authorities

mentioned in sub-regulation (6) within four months, the Resolution

Committee shall make its own decision and shall draw up and

maintain a resolution plan for the entities under its jurisdiction. The

Resolution Committee, in its capacity as the resolution authority

responsible for the subsidiary, shall provide full reasons for each

individual decision. It shall set out the reasons for disagreeing with

the proposed group resolution plan and shall take into account the

views and reservations of the Authority and the other European

regulatory authorities and European resolution authorities. The

Resolution Committee shall notify its decision to the other members

of the resolution college

Provided that, subject to Article 13(9) of the BRRD, where

the Resolution Committee is responsible for a subsidiary, if, at the

end of the four-month period, any of the authorities mentioned in sub-

regulation (6) has referred the matter to EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee shall defer its decision and await any decision that the

EBA may take in accordance with Article 19(3) of that Regulation,

and shall take its decision in accordance with the decision of the

EBA. The four-month period shall be deemed to be the conciliation

period within the meaning of that Regulation. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision has been reached. In the absence of an EBA decision

within one month, the decision of the Resolution Committee, where it

is responsible for a subsidiary, shall apply.

(9) Where the Resolution Committee does not disagree with a

decision taken by a relevant European resolution authority

responsible for a subsidiary in accordance with Article 13(6) of the

BRRD, the Resolution Committee and the other European resolution

authorities which do not disagree with such a decision may reach a

joint decision on a group resolution plan covering entities licensed in

terms of the Banking Act and the Investment Services Act as well as

those entities authorised by the European regulatory authorities

mentioned in this sub-regulation.

(10) The joint decisions referred to in sub-regulations (6) and

(9) and any decisions taken by European resolution authorities in the

absence of a joint decision in accordance with Article 13(5) and (6) of

the BRRD, shall be recognised as conclusive and applied by the

Resolution Committee.

(11) The Resolution Committee may, within four months of the

date of transmission, request the EBA to assist the authorities

mentioned in sub-regulation (4) in reaching an agreement in

accordance with Article 19(3) of Regulation (EU) No 1093/2010

unless the Resolution Committee assesses that the subject matter

under disagreement may in any way impinge on Malta’s fiscal

responsibilities. The four-month period shall be deemed to be the

conciliation period within the meaning of Regulation (EU) No 1093/

2010. The matter shall not be referred to the EBA after the end of the

four-month period or after a joint decision has been reached. In the

absence of an EBA decision within one month, the decisions of the

European resolution authority acting as the group-level resolution

authority taken in accordance with Article 13(5) of the BRRD and, or,

of the European resolution authorities responsible for subsidiaries

taken in accordance with Article 13(6) of the BRRD shall apply.

(12) Where joint decisions are taken pursuant to sub-

regulations (6) and (9) and where the Resolution Committee or a

European resolution authority, assesses that the subject matter of a

disagreement regarding group resolution plans impinges on the fiscal

responsibilities of Malta or of its Member State respectively, the

Resolution Committee, in its capacity as the group-level resolution

authority, shall initiate a reassessment of the group resolution plan,

including the minimum requirement for own funds and eligible

liabilities.

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Reg. 14 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall transmit the Transmission of

resolution plans and any changes thereto to the Authority and the resolution

to the competent

authorities.

relevant European regulatory authorities.

(2) The Resolution Committee in its capacity as the group-

level resolution authority shall transmit group resolution plans and

any changes thereto to the Authority and the relevant European

regulatory authorities.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 15 — Recovery and Resolution Regulations, 2015 Open official source

(1) After the Resolution Committee has consulted with Assessment of

the Authority and the European resolution authorities of the resolvability

institutions.

jurisdictions in which significant branches are located insofar as is

relevant to the significant branch, it shall assess the extent to which

an institution, which is not part of a group, is resolvable without the

assumption of any of the following

(a)

extraordinary public financial support besides the

use of the financing arrangements established in accordance

with regulation 100;

(b)

central bank emergency liquidity assistance;

(c)

central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate terms

Provided that an institution shall be deemed to be

resolvable if it is feasible and credible for the Resolution Committee

to either liquidate it under normal insolvency proceedings or to

resolve it by applying the different resolution tools and powers to the

institution while avoiding to the maximum extent possible any

significant adverse effect on the financial system, including in

circumstances of broader financial instability or system wide events,

of Malta, or other Member States or the European Union and with a

view to ensuring the continuity of critical functions carried out by the

institution. The Resolution Committee shall notify the EBA in a

timely manner whenever an institution is deemed not to be resolvable.

(2) For the purposes of the assessment of resolvability referred

to in sub-regulation (1), the Resolution Committee shall, as a

minimum, examine the matters specified in Section C of the Schedule

to these regulations.

(3) The resolvability assessment under this regulation shall be

made by the Resolution Committee at the same time as and for the

purposes of the drawing up and updating of the resolution plan in

accordance with regulation 10.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 16 Assessment of resolvability for groups. — Recovery and Resolution Regulations, 2015 Open official source

(1)

The Resolution Committee -

(a)

where it is the group-level resolution authority,

together with the European resolution authorities of

subsidiaries; or

(b) where it is responsible for a subsidiary, together

with the European resolution authority acting as the group-level

resolution authority and the European resolution authorities of

other subsidiaries, if any,

after consulting the Authority and the European regulatory authorities

in their capacity as either the consolidating supervisor, or where

responsible for such subsidiaries, and the European resolution

authorities of the jurisdictions in which significant branches are

located insofar as is relevant to the significant branch, shall assess the

extent to which groups are resolvable without the assumption of any

of the following

(i)

extraordinary public financial support besides the

use of the financing arrangements established in accordance

with regulation 100;

(ii)

central bank emergency liquidity assistance;

(iii) central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate terms

Provided that a group shall be deemed to be resolvable if it

is feasible and credible for the Resolution Committee and the

relevant European resolution authorities to either wind up group

entities under normal insolvency proceedings or to resolve group

entities by applying resolution tools and powers to group entities

while avoiding to the maximum extent possible any significant

adverse effect on the financial system, including in circumstances of

broader financial instability or system wide events, of Malta, of the

Member States in which the other group entities are situated, or other

Member States or the European Union and with a view to ensuring

the continuity of critical functions carried out by the group entities,

where they can be easily separated in a timely manner or by other

means. Where the Resolution Committee acts as the group-level

resolution authority, it shall notify the EBA in a timely manner

whenever a group is deemed not to be resolvable. The assessment of

group resolvability shall be taken into consideration by the resolution

colleges referred to in regulation 88.

(2) For the purposes of the assessment of group resolvability,

the Resolution Committee shall, as a minimum, examine the matters

specified in Section C of the Schedule to these regulations

Provided that the assessment of group resolvability under

this regulation shall be made at the same time as, and for the purposes

of drawing up and updating of the group resolution plans in

accordance with regulation 12. The assessment shall be made under

the decision-making procedure laid down in regulation 13.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 17 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where an assessment of resolvability for an Powers to

institution is carried out in accordance with regulations 15 and 16, address

remove

and where the Resolution Committee, after consulting the Authority, impediments

resolvability.

determines that there are substantive impediments to the resolvability

of that institution, the Resolution Committee shall notify in writing

that determination to the institution concerned, to the Authority and

to the European resolution authorities of the jurisdictions in which

significant branches are located.

(2) The requirement for the Resolution Committee to draw up

resolution plans or for the Resolution Committee and the relevant

European resolution authorities to reach a joint decision on group

resolution plans in accordance with regulations 10(1) and 13(6)

respectively shall be suspended following the notification referred to

in sub-regulation (1) until the measures to remove the substantive

impediments to resolvability have been accepted by the Resolution

Committee pursuant to sub-regulation (3) or decided pursuant to sub-

regulation (4).

(3) Within four months of the date of receipt of a notification

made in accordance with sub-regulation (1), the institution shall

propose to the Resolution Committee possible measures to address or

remove the substantive impediments identified in the notification.

The Resolution Committee, after consulting the Authority, shall

assess whether those measures effectively address or remove the

substantive impediments in question.

(4) Where the Resolution Committee assesses that the

measures proposed by an institution in accordance with sub-

regulation (3) do not effectively reduce or remove the impediments in

question, it shall, either directly or indirectly through the Authority,

require the institution to take alternative measures that may achieve

that objective, and notify in writing those measures to the institution,

which shall propose within one month a plan to comply with them

Provided that in identifying alternative measures, the

Resolution Committee shall demonstrate how the measures proposed

by the institution were not able to remove the impediments to

resolvability and how the alternative measures proposed are

proportionate in removing them. The Resolution Committee shall

take into account the threat to financial stability of those impediments

to resolvability and the effect of the measures on the business of the

institution, its stability and its ability to contribute to the economy.

(5) For the purposes of sub-regulation (4), the Resolution

Committee shall have the power to take any of the following

measures

(a)

require the institution to revise any intra-group

financing agreements or review the absence thereof, or draw up

service agreements, whether intra-group or with third parties, to

cover the provision of critical functions;

(b) require the institution to limit its maximum

individual and aggregate exposures;

(c)

impose specific or regular additional information

requirements relevant for resolution purposes;

(d)

require the institution to divest specific assets;

(e)

require the institution to limit or cease specific

existing or proposed activities;

(f)

restrict or prevent the development of new or

existing business lines or sale of new or existing products;

(g) require changes to legal or operational structures of

the institution or any group entity, either directly or indirectly

under its control, so as to reduce complexity in order to ensure

that critical functions may be legally and operationally

separated from other functions through the application of the

resolution tools;

(h) require an institution or a parent undertaking to set

up a parent financial holding company in a Member State or a

Union parent financial holding company;

(i)

require an institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) to issue eligible liabilities to meet the requirements of

regulation 45;

(j)

require an institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1), to take other steps to meet the minimum requirement for

own funds and eligible liabilities under regulation 45, including

in particular to attempt to renegotiate any eligible liability,

additional Tier 1 instrument or Tier 2 instrument it has issued,

with a view to ensuring that any decision of the Resolution

Committee to write down or convert that liability or instrument

would be effected: where Malta is the jurisdiction governing

that liability or instrument, under Maltese law; or, where Malta

is not the jurisdiction governing that liability or instrument,

under the law of such jurisdiction; and

(k) where an institution is the subsidiary of a mixed-

activity holding company, requiring that the mixed-activity

holding company set up a separate financial holding company to

control the institution, if necessary in order to facilitate the

resolution of the institution and to avoid the application of the

resolution tools and powers referred to in Title IV of the BRRD

having an adverse effect on the non-financial part of the group.

(6) A decision made pursuant to sub-regulation (1) or (4) shall

meet the following requirements

(a)

it shall be supported by reasons for the assessment

or determination in question;

(b) it shall indicate how that assessment or

determination complies with the requirement for proportionate

application laid down in sub-regulation (4); and

(c)

it shall be subject to a right of appeal.

(7) Before identifying any measure referred to in sub-

regulation (4), the Resolution Committee, after consulting the

Authority and, if appropriate, the Central Bank, shall duly consider

the potential effect of those measures on the particular institution, on

the internal market for financial services, on the financial stability in

other Member States and the European Union as a whole.

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Reg. 18 — Recovery and Resolution Regulations, 2015 Open official source

(1)

The Resolution Committee shall -

Powers to

address or

remove

(a)

where it is the group-level resolution authority,

impediments to

resolvability

together with the European resolution authorities of

group treatment.

subsidiaries; or

(b) where it is responsible for a subsidiary, together

with the European resolution authority acting as the group-level

resolution authority and the European resolution authorities of

other subsidiaries, if any,

after consulting the supervisory college and the European resolution

authorities of the jurisdictions in which significant branches are

located insofar as is relevant to the significant branch, consider the

assessment required by regulation 16 within the resolution college

and shall take all reasonable steps to reach a joint decision on the

application of measures identified in accordance with regulation

17(4) in relation to all institutions that are part of the group.

(2) The Resolution Committee shall, in its capacity as the

group-level resolution authority, in cooperation with the

consolidating supervisor and the EBA in accordance with Article

25(1) of Regulation (EU) No 1093/2010, prepare and submit a report

to the Union parent undertaking, to the European resolution

authorities of subsidiaries, which will provide it to the subsidiaries

under their supervision, and to the European resolution authorities of

jurisdictions in which significant branches are located. The report

shall be prepared after consulting the Authority and the relevant

European regulatory authorities, and shall analyse the substantive

impediments to the effective application of the resolution tools and

the exercising of the resolution powers in relation to the group. The

report shall consider the impact on the institution’s business model

and recommend any proportionate and targeted measures that, in the

Resolution Committee’s view, are necessary or appropriate to remove

those impediments.

(3) Where the Resolution Committee is responsible for a

subsidiary, it shall, after receiving a report from the European

resolution authority acting as the group-level resolution authority in

accordance with Article 18(2) of the BRRD, provide such a report to

the subsidiary under its supervision.

(4) Within four months of the date of receipt of the report

referred to in sub-regulation (2), the Union parent undertaking may

submit observations and propose to the Resolution Committee in its

capacity as the group-level resolution authority alternative measures

to remedy the impediments identified in the report. The Resolution

Committee in its capacity as the group-level resolution authority shall

communicate any measure proposed by the Union parent undertaking

to the consolidating supervisor, the EBA, the European resolution

authorities of the subsidiaries and the European resolution authorities

of the jurisdictions in which significant branches are located insofar

as is relevant to the significant branch.

(5) The Resolution Committee shall -

(a)

where it is the group-level resolution authority,

together with the European resolution authorities of the

subsidiaries; or

(b) where it is responsible for a subsidiary, together

with the European resolution authority acting as the group-level

resolution authority and the European resolution authorities

responsible for the other subsidiaries, if any,

after consulting the Authority and the European regulatory and

resolution authorities of jurisdictions in which significant branches

are located, do everything within their power to reach a joint decision

within the resolution college regarding the identification of the

material 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 Malta and in all the Member States where the group

operates

Provided that, the joint decision shall be reached within

four months of submission of any observations by the Union parent

undertaking or at the expiry of the four-month period referred to in

sub-regulation (4), whichever the earlier. The joint decision shall be

reasoned and set out in a document which, where the Resolution

Committee is the group-level resolution authority, shall be provided

by the Resolution Committee to the Union parent undertaking

Provided further that the Resolution Committee may

request the EBA to assist the authorities referred to in this sub-

regulation in reaching a joint decision in accordance with Article

31(c) of Regulation (EU) No 1093/2010.

(6) Where the Resolution Committee is the group-level

resolution authority, in the absence of a joint decision within the

period referred to in the first proviso to sub-regulation (5), the

Resolution Committee shall make its own decision on the appropriate

measures to be taken in accordance with regulation 17(4) at the group

level. The decision shall be fully reasoned, shall take into account the

views and reservations of European resolution authorities and shall be

provided to the Union parent undertaking by the Resolution

Committee in its capacity as the group-level resolution authority

Provided that, if, at the end of the four-month period, any

of the authorities mentioned in sub-regulation (5) has referred a

matter mentioned in sub-regulation (9) to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee in its capacity as the group-level resolution authority shall

defer its decision and await any decision that the EBA may take in

accordance with Article 19(3) of that Regulation, and shall take its

decision in accordance with the decision of the EBA. The four-month

period shall be deemed to be the conciliation period within the

meaning of that Regulation. The matter shall not be referred to the

EBA after the end of the four-month period or after a joint decision

has been reached. In the absence of an EBA decision within one

month, the decision of the Resolution Committee in its capacity as the

group-level resolution authority shall apply.

(7) Where the Resolution Committee is responsible for a

subsidiary, in the absence of a joint decision, the Resolution

Committee shall take a decision on the appropriate measures to be

taken by subsidiaries at individual level in accordance with regulation

17(4). The decision shall be fully reasoned and shall take into account

the views and reservations of the other European resolution

authorities. The decision shall be provided to the subsidiary

concerned and to the European resolution authority acting as the

group-level resolution authority

Provided that, if, at the end of the four-month period, any

of the authorities mentioned in sub-regulation (5) has referred a

matter mentioned in sub-regulation (9) to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee shall defer its decision and await any decision that the

EBA may take in accordance with Article 19(3) of that Regulation,

and shall take its decision in accordance with the decision of the

EBA. The four-month period shall be deemed to be the conciliation

period within the meaning of that Regulation. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision has been reached. In the absence of an EBA decision

within one month, the decision of the Resolution Committee shall

apply.

(8) The joint decision referred to in the first proviso of sub-

regulation (5) and any decision taken by European resolution

authorities in the absence of a joint decision referred to in sub-

regulation (6) and (7) shall be recognised as conclusive and applied

by the Resolution Committee.

(9) In the absence of a joint decision on the taking of any

measures referred to in paragraphs (g), (h) or (k) of regulation 17(5),

the Resolution Committee may, within four months of the date of

submission of any observations made by the Union parent

undertaking in accordance with sub-regulation (4), and in accordance

with Article 18(6) or (7) of the BRRD, request the EBA to assist the

authorities mentioned in sub-regulation (5) in reaching an agreement

in accordance with Article 19(3) of Regulation (EU) No 1093/2010.

The four-month period shall be deemed to be the conciliation period

within the meaning of Regulation (EU) No 1093/2010. The matter

shall not be referred to the EBA after the end of the four-month

period or after a joint decision has been reached. In the absence of an

EBA decision within one month, the decisions of the European

resolution authority acting as the group-level resolution authority

taken in accordance with Article 18(6) of the BRRD and, or, of the

European resolution authorities responsible for subsidiaries taken in

accordance with Article 18(7) of the BRRD shall apply.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 19 — Recovery and Resolution Regulations, 2015 Open official source

(1) A parent institution, a Union parent institution, or an Group financial

entity referred to in paragraphs (c) or (d) of the definition "entity" in support

agreement.

regulation 2(1) and its subsidiaries, whether established in another

Member State or in a third country and which are institutions or

financial institutions covered by the consolidated supervision of the

parent undertaking, may enter into an agreement to provide financial

support to any other party to the agreement that meets the conditions

for early intervention pursuant to regulation 27, provided that the

conditions laid down in this regulation and in regulations 20 to 26 are

satisfied.

(2) This regulation and regulations 20 to 26 do not apply to

intra-group financial arrangements including funding arrangements

and the operation of centralised funding arrangements provided that

none of the parties to such arrangements meets the conditions for

early intervention.

(3) A group financial support agreement shall not constitute a

prerequisite

(a)

to provide group financial support to any group

entity that experiences financial difficulties if the institution

decides to do so, on a case-by-case basis and according to the

group policies if it does not represent a risk for the whole group;

or

(b)

to operate in a Member State.

(4) Notwithstanding the provision of any other law, intra-

group financial support transactions that are undertaken in

accordance with this regulation and regulations 20 to 26, shall not be

prohibited

Provided that, this regulation and regulations 20 to 26 shall

not prevent the imposition of limitations on intra-group transactions

in connection with Maltese law exercising the options provided for in

the CRR, transposing the CRD or requiring the separation of parts of

a group or activities carried on within a group for reasons of financial

stability.

(5) The group financial support agreement may

(a)

cover one or more subsidiaries of the group, and

may provide for financial support from the parent undertaking

to subsidiaries, from subsidiaries to the parent undertaking,

between subsidiaries of the group that are party to the

agreement, or any combination of those entities;

(b) provide for financial support in the form of a loan,

the provision of guarantees, the provision of assets for use as

collateral, or any combination of those forms of financial

support, in one or more transactions, including between the

beneficiary of the support and a third party.

(6) Where, in accordance with the terms of the group financial

support agreement, a group entity agrees to provide financial support

to another group entity, the agreement may include a reciprocal

agreement by the group entity receiving the support to provide

financial support to the group entity providing the support.

(7) The group financial support agreement shall specify the

principles for the calculation of the consideration, for any transaction

made under it. Those principles shall include a requirement that the

consideration shall be set at the time of the provision of financial

support. The agreement, including the principles for calculation of the

consideration for the provision of financial support and the other

terms of the agreement, shall comply with the following principles

(a)

each party must be acting freely in entering into the

agreement;

(b) in entering into the agreement and in determining

the consideration for the provision of financial support, each

party must be acting in its own best interests which may take

account of any direct or any indirect benefit that may accrue to a

party as a result of provision of the financial support;

(c)

each party providing financial support must have

full disclosure of relevant information from any party receiving

financial support prior to determination of the consideration for

the provision of financial support and prior to any decision to

provide financial support;

(d) the consideration for the provision of financial

support may take account of information in the possession of

the party providing financial support based on it being in the

same group as the party receiving financial support and which is

not available to the market; and

(e)

the principles for the calculation of the consideration

for the provision of financial support are not obliged to take

account of any anticipated temporary impact on market prices

arising from events external to the group.

(8) The group financial support agreement may only be

concluded if, at the time the proposed agreement is made, in the

opinion of the Authority and the respective European regulatory

authorities of the parties to the group financial support agreement,

none of the parties meets the conditions for early intervention.

(9) Any right, claim or action arising from the group financial

support agreement may be exercised only by the parties to the

agreement, with the exclusion of third parties.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 20 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Authority is the consolidating supervisor, Review of

the Union parent institution shall submit to the Authority an proposed

agreement.

application for authorisation of any proposed group financial support

agreement proposed pursuant to regulation 19. The application shall

contain the text of the proposed agreement and identify the group

entities that propose to be parties.

(2) The Authority, where it is the consolidating supervisor

shall forward without delay the application to the European

regulatory authorities of each subsidiary that proposes to be a party to

the agreement, with a view to reaching a joint decision.

(3) The Authority, where it is the consolidating supervisor

shall, in accordance with the procedure set out in sub-regulations (5)

and (6) grant the authorisation if the terms of the proposed agreement

are consistent with the conditions for financial support set out in

regulation 23.

(4) The Authority, where it is the consolidating supervisor

may, in accordance with the procedure set out in sub-regulations (5)

and (6), prohibit the conclusion of the proposed agreement if it is

considered to be inconsistent with the conditions for financial support

set out in regulation 23.

(5) The Authority shall, do everything within its power to

reach a joint decision

(a)

where the Authority is the consolidating supervisor,

with the European regulatory authorities of subsidiaries; or

(b) where the Authority is responsible for a subsidiary,

with the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any,

taking into account the potential impact, including any fiscal

consequences, of the execution of the agreement in Malta and in all

the Member States where the group operates, on whether the terms of

the proposed agreement are consistent with the conditions for

financial support laid down in regulation 23 within four months of the

date of receipt of the application by the consolidating supervisor. The

joint decision shall be set out in a document containing the fully

reasoned decision, which, where the Authority is the consolidating

supervisor, shall be provided to the applicant by the Authority

Provided that, the Authority may request the EBA to assist

the authorities mentioned in this sub-regulation in reaching an

agreement in accordance with Article 31 of Regulation (EU) No

1093/2010.

(6) Where the Authority is the consolidating supervisor, in the

absence of a joint decision between the authorities mentioned in sub-

regulation (5) within four months, the Authority shall make its own

decision on the application. The decision shall be set out in a

document containing the full reasoning and shall take into account the

views and reservations of the other European regulatory authorities

expressed during the four-month period. The Authority acting as the

consolidating supervisor shall notify its decision to the applicant and

to the other European regulatory authorities.

(7) The Authority may, within four months of the date of

receipt of the application by the consolidating supervisor, refer the

matter to the EBA in accordance with Article 19 of Regulation (EU)

No 1093/2010. The four-month period shall be deemed to be the

conciliation period within the meaning of that Regulation. The matter

shall not be referred to the EBA after the end of the four-month

period or after a joint decision has been reached.

(8) Where the Authority is the consolidating supervisor, if, at

the end of the four-month period, any of the European regulatory

authorities concerned has referred the matter to the EBA in

accordance with Article 19 of Regulation (EU) No 1093/2010, the

Authority shall defer its decision and await any decision that the EBA

may take in accordance with Article 19(3) of that Regulation, and

shall take its decision in accordance with the decision of the EBA.

The four-month period shall be deemed to be the conciliation period

within the meaning of that Regulation. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision has been reached.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 21 — Recovery and Resolution Regulations, 2015 Open official source

(1) Any proposed agreement that has been authorised by Approval of

the Authority and the European resolution authorities concerned shall proposed

agreement by

be submitted for approval to the shareholders of every group entity shareholders.

that proposes to enter into the agreement. In such a case, the

agreement shall be valid only in respect of those parties whose

shareholders have approved the agreement in accordance with sub-

regulation (2).

(2) A group financial support agreement shall be valid in

respect of a group entity only if its shareholders have authorised the

board of directors of that group entity to make a decision that the

group entity shall provide or receive financial support in accordance

with the terms of the agreement and in accordance with the conditions

laid down in regulations 19 to 26 and that shareholder authorisation

has not been revoked.

(3) The board of directors of each entity that is party to an

agreement shall report each year to the shareholders on the

performance of the agreement, and on the implementation of any

decision taken pursuant to the agreement.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 22 — Recovery and Resolution Regulations, 2015 Open official source

The Authority shall transmit to the Resolution Committee Transmission of

and to the relevant European resolution authorities, the authorised the

financial

support

group financial support agreements and any changes thereto.

agreements.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 23 — Recovery and Resolution Regulations, 2015 Open official source

Financial support by a group entity in accordance with Conditions for

regulation 19 may only be provided if all the following conditions are group

support.

met

(a)

there is a reasonable prospect that the support

provided significantly redresses the financial difficulties of the

group entity receiving the support;

(b) the provision of financial support has the objective

of preserving or restoring the financial stability of the group as a

whole or any of the entities of the group and is in the interests of

the group entity providing the support;

(c)

the financial support is provided on terms, including

consideration in accordance with regulation 19(7);

(d)

there is a reasonable prospect, on the basis of the

information available to the board of directors of the group

entity providing financial support at the time when the decision

to grant financial support is taken, that the consideration for the

support will be paid and, if the support is given in the form of a

loan, that the loan will be reimbursed, by the group entity

receiving the support. If the support is given in the form of a

guarantee or any form of security, the same condition shall

apply to the liability arising for the recipient if the guarantee or

the security is enforced;

(e)

the provision of the financial support would not

jeopardise the liquidity or solvency of the group entity

providing the support;

(f)

the provision of the financial support would not

create a threat to financial stability: in particular in Malta, where

the group entity providing support is in Malta; or, in particular

in the Member State of such a group entity providing support,

where the group entity providing support is not established in

Malta;

(g) the group entity providing the support complies at

the time the support is provided with the requirements of the

CRD relating to capital or liquidity and any requirements

imposed pursuant to Article 104(2) of the CRD and the

provision of the financial support shall not cause the group

entity to infringe those requirements, unless authorised

(i) where the Authority is responsible for the

supervision on an individual basis of the entity providing

the support, by the Authority; or

(ii) where the Authority is not responsible for the

supervision on an individual basis of the entity providing

the support, by the European regulatory authority

responsible for such supervision;

(h) the group entity providing the support complies, at

the time when the support is provided, with the requirements

relating to large exposures laid down in the CRR and in the

CRD including any national legislation or any legislation in

force in any other Member State exercising the options provided

therein, and the provision of the financial support shall not

cause the group entity to infringe those requirements, unless

authorised by the Authority responsible for the supervision on

an individual basis of the group entity providing the support;

(i)

the provision of the financial support would not

undermine the resolvability of the group entity providing the

support.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 24 — Recovery and Resolution Regulations, 2015 Open official source

The decision to provide group financial support in Decision to

accordance with the agreement shall be taken by the board of provide

financial

directors of the group entity providing financial support. That support.

decision shall be reasoned and shall indicate the objective of the

proposed financial support. In particular, the decision shall indicate

how the provision of the financial support complies with the

conditions laid down in regulation 23. The decision to accept group

financial support in accordance with the agreement shall be taken by

the board of directors of the group entity receiving financial support.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 25 — Recovery and Resolution Regulations, 2015 Open official source

(1) Before providing support in accordance with a Right of

group financial support agreement, the board of directors of a group opposition

the Authority.

entity that intends to provide financial support shall, where the

Authority is responsible for such a group entity, notify

(a)

the Authority;

(b) where different from authorities in paragraphs (a)

and (c), where applicable, the European regulatory authority

acting as the consolidating supervisor;

(c)

where different from paragraphs (a) and (b), the

European regulatory authority of the group entity receiving the

financial support; and

(d)

the EBA.

The notification shall include the reasoned decision of the

board of directors in accordance with regulation 24 and details of the

proposed financial support including a copy of the group financial

support agreement.

(2) Within five business days from the date of receipt of a

complete notification, the Authority being the Authority of the group

entity providing financial support may agree with the provision of

financial support, or may prohibit or restrict it if it assesses that the

conditions for group financial support laid down in regulation 23

have not been met. A decision of the Authority to prohibit or restrict

the financial support shall be reasoned.

(3) The decision of the Authority to agree, prohibit or restrict

the financial support shall be immediately notified to

(a)

the consolidating supervisor being either the

Authority or an European regulatory authority;

(b) the European regulatory authority of the group

entity receiving the support; and

(c)

the EBA

Provided that where the Authority is the consolidating

supervisor it shall immediately inform other members of the

supervisory college and the members of the resolution college.

(4) Where the Authority is the consolidating supervisor or

where the Authority is the Authority responsible for the group entity

receiving support and it has objections regarding the decision to

prohibit or restrict the financial support, it may within two days refer

the matter to the EBA and request its assistance in accordance with

Article 31 of Regulation (EU) No 1093/2010.

(5) If the Authority, as the Authority responsible for the group

entity providing financial support, does not prohibit or restrict the

financial support within the period indicated in sub-regulation (2), or

has agreed before the end of that period to that support, financial

support may be provided in accordance with the terms submitted to

the Authority.

(6) The decision of the board of directors of the institution to

provide financial support shall, where the Authority is responsible for

such an institution, be transmitted to

(a)

the Authority;

(b) where different from authorities in paragraphs (a)

and (c), and where applicable, the consolidating supervisor;

(c)

where different from paragraphs (a) and (b), the

European regulatory authority of the group entity receiving the

financial support; and

(d)

the EBA

Provided that where the Authority is the consolidating

supervisor, it shall immediately inform the other members of the

supervisory college and the members of the resolution college.

(7) If the Authority, as the Authority responsible for the group

entity providing financial support, restricts or prohibits group

financing support pursuant to sub-regulation (2) and where the group

recovery plan in accordance with regulation 7(5) makes reference to

intra-group financial support, the Authority in its capacity as the

Authority of the group entity in relation to whom the support is

restricted or prohibited may request the consolidating supervisor to

initiate a reassessment of the group recovery plan pursuant to

regulation 8 or, where a recovery plan is drawn up on an individual

basis, request the group entity to submit a revised recovery plan.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 26 — Recovery and Resolution Regulations, 2015 Open official source

Group entities shall make public whether or not they have Disclosure.

entered into a group financial support agreement pursuant to

regulation 19 and make public a description of the general terms of

any such agreement and the names of the group entities that are party

to it and update that information at least annually. Articles 431 to 434

of the CRR shall apply.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 27 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where an institution infringes or, due inter alia to a Early

rapidly deteriorating financial condition, including deteriorating intervention

measures.

liquidity situation, increasing level of leverage, non-performing loans

or concentration of exposures, as assessed on the basis of a set of

triggers, which may include the institution’s own funds requirement

plus 1.5 percentage points, is likely in the near future to infringe the

requirements of the CRR, the CRD, Title II of Directive 2014/65/EU

or any of Articles 3 to 7, 14 to 17, and 24, 25 and 26 of Regulation

(EU) No 600/2014 of the European parliament and of the Council of

15 May 2014 on markets in financial instruments and amending

Regulation (EU) No 648/2012, the Authority shall have at its

disposal, without prejudice to the measures referred to in regulation 9

of the Banking Act (Supervisory Review) Regulations and regulation S.L. 371.16

16 of the Investment Services Act (Supervisory Review) Regulations S.L. 370.15

where applicable, at least the following measures

(a)

require the board of directors of the institution to

implement one or more of the arrangements or measures set out

in the recovery plan or in accordance with regulation 5(2) to

update such a recovery plan when 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 plan within a

specific timeframe and in order to ensure that the conditions

referred to in the introductory phrase no longer apply;

(b) require the board of directors of the institution to

examine the situation, identify measures to overcome any

problems identified and draw up an action programme to

overcome those problems and a timetable for its

implementation;

(c)

require the board of directors of the institution to

convene, or if the board of directors fails to comply with that

requirement convene directly, a meeting of shareholders of the

institution, and in both cases set the agenda and require certain

decisions to be considered for adoption by the shareholders;

(d) require one or more directors or members of the

senior management to be removed or replaced if those persons

are found unfit to perform their duties pursuant to Article 13 of

the CRD or Article 9 of Directive 2014/65/EU;

(e)

require the board of directors of the institution to

draw up a plan for negotiation on restructuring of debt with

some or all of its creditors according to the recovery plan, where

applicable;

(f)

require changes to the institution's business strategy;

(g) require changes to the legal or operational structures

of the institution; and

(h) acquire, including through on-site inspections and

provide to the Resolution Committee, all the information

necessary in order to update the resolution plan and prepare for

the possible resolution of the institution and for valuation of the

assets and liabilities of the institution in accordance with

regulation 36.

(2) The Authority shall notify the Resolution Committee

without delay upon determining that the conditions laid down in sub-

regulation (1) have been met in relation to an institution. The

Resolution Committee shall have the power to require the institution

to contact potential purchasers in order to prepare for the resolution of

the institution, subject to the conditions laid down in regulation 39(2)

and the confidentiality provisions laid down in regulation 84.

(3) For each of the measures referred to in sub-regulation (1),

the Authority shall set an appropriate deadline for completion, so as

to enable the Authority to evaluate the effectiveness of the measure.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 28 Removal of the senior management and the board of directors. — Recovery and Resolution Regulations, 2015 Open official source

Where there is a significant deterioration in the financial

situation of an institution or where there are serious infringements of

law, of regulations or of the statutes of the institution, or serious

administrative irregularities, and other measures taken in accordance

with regulation 27 are not sufficient to reverse that deterioration, the

Authority may require the removal of the senior management or the

board of directors of the institution, in its entirety or with regard to

individuals. The appointment of the new senior management or the

board of directors shall be done in accordance with Maltese and

European Union law and be subject to the approval or consent of the

Authority.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 29 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where replacement of the senior management or Temporary

board of directors as referred to in regulation 28 is deemed to be administrator.

insufficient by the Authority to remedy the situation, the Authority

may appoint one or more temporary administrators to the institution.

The Authority may, based on what is proportionate in the

circumstances, appoint any temporary administrator either to replace

the board of directors of the institution temporarily or to work

temporarily with the board of directors of the institution and the

Authority shall specify its decision at the time of appointment. If the

Authority appoints a temporary administrator to work with the board

of directors of the institution, the Authority shall further specify, at

the time of such appointment the role, duties and powers of the

temporary administrator and any requirements for the board of

directors of the institution to consult or to obtain the consent of the

temporary administrator prior to taking specific decisions or actions.

The Authority shall be required to make public the appointment of

any temporary administrator except where the temporary

administrator does not have the power to represent the institution. The

Authority shall further ensure that any temporary administrator has

the qualifications; ability and knowledge required to carry out his or

her functions and is free of any conflict of interests.

(2) The Authority shall specify the powers of the temporary

administrator at the time of the appointment of the temporary

administrator based on what is proportionate in the circumstances.

Such powers may include some or all of the powers of the board of

directors of the institution under the statutes of the institution and

under Maltese law, including the power to exercise some or all of the

administrative functions of the board of directors of the institution.

The powers of the temporary administrator in relation to the

institution shall comply with the Companies Act.

(3) The role and functions of the temporary administrator shall

be specified by the Authority at the time of appointment and may

include ascertaining the financial position of the institution, managing

the business or part of the business of the institution with a view to

preserving or restoring the financial position of the institution and

taking measures to restore the sound and prudent management of the

business of the institution. The Authority shall specify any limits on

the role and functions of the temporary administrator at the time of

appointment.

(4) The Authority shall have the exclusive power to appoint

and remove any temporary administrator; may remove a temporary

administrator at any time and for any reason; and may vary the terms

of appointment of a temporary administrator at any time subject to

this regulation.

(5) The Authority may require that certain acts of a temporary

administrator be subject to the prior consent of the Authority. The

Authority shall specify any such requirements at the time of

appointment of a temporary administrator or at the time of any

variation of the terms of appointment of a temporary administrator. In

any case, the temporary administrator may exercise the power to

convene a general meeting of the shareholders of the institution and

to set the agenda of such a meeting only with the prior consent of the

Authority.

(6) The Authority may require that a temporary administrator

draws up reports on the financial position of the institution and on the

acts performed in the course of its appointment, at intervals set by the

Authority and at the end of his or her mandate.

(7) The appointment of a temporary administrator shall not

last more than one year. That period may be exceptionally renewed if

the conditions for appointing the temporary administrator continue to

be met. The Authority shall be responsible for determining whether

conditions are appropriate to maintain a temporary administrator and

justifying any such decision to shareholders.

(8) Subject to this regulation, the appointment of a temporary

administrator shall not prejudice the rights of the shareholders in

accordance with European Union or Maltese company law.

(9) The liability of the temporary administrator may be limited

for acts and omissions in the discharge of his or her duties as

temporary administrator in accordance with sub-regulation (3).

(10) A temporary administrator appointed pursuant to this

regulation shall not be deemed to be a shadow director or a de facto

director under Maltese law.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 30 Coordination of early intervention measures and appointment of temporary administrator in relation to groups. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the conditions for the imposition of

requirements under regulation 27 or the appointment of a temporary

administrator in accordance with regulation 29 are met in relation to a

Union parent undertaking, where the Authority is the consolidating

supervisor, it shall notify the EBA and consult the European

regulatory authorities within the supervisory college.

(2) Following the notification and consultation, where the

Authority is the consolidating supervisor, it shall decide whether to

apply any of the measures in regulation 27 or appoint a temporary

administrator under regulation 29 in respect of the relevant Union

parent undertaking, taking into account the impact of those measures

on the group entities in other Member States. The Authority, where it

is the consolidating supervisor shall notify the decision to the

European regulatory authorities within the supervisory college and

the EBA.

(3) Where the Authority is responsible for the supervision on

an individual basis of a subsidiary of a Union parent undertaking and

the conditions for the imposition of requirements under regulation 27

or the appointment of a temporary administrator under regulation 29

are met in relation to such a subsidiary, the Authority, where it intends

to take a measure in accordance with those regulations, shall notify

the EBA and consult the European regulatory authority acting as the

consolidating supervisor.

(4) Following the notification and consultation referred to in

sub-regulation (3), the Authority, as the Authority responsible for the

supervision on an individual basis of the subsidiary of the Union

parent undertaking, shall decide whether to apply any of the measures

in regulation 27 or appoint a temporary administrator under

regulation 29. The decision shall give due consideration to any

assessment of the European regulatory authority acting as the

consolidating supervisor. The Authority, shall notify the decision to

the European regulatory authority acting as the consolidating

supervisor and other European regulatory authorities within the

supervisory college and the EBA.

(5) Where the Authority is the consolidating supervisor, on

receiving a notification from the European regulatory authority

responsible for the supervision on an individual basis of a subsidiary

of a Union parent undertaking in accordance with Article 30(3) of the

BRRD, the Authority may assess the likely impact of the imposition

of requirements under regulation 27 or the appointment of a

temporary administrator in accordance with regulation 29 to the

institution in question, on the group or on group entities in other

Member States and shall communicate that assessment to the

European regulatory authority concerned within three days.

(6) Where the Authority and one or more European regulatory

authorities intend to appoint a temporary administrator or apply any

of the measures in regulation 27 to more than one institution in the

same group, the Authority together with the other relevant European

regulatory authorities shall consider whether it is more appropriate to

appoint the same temporary administrator for all the entities

concerned or to coordinate the application of any measures in

regulation 27 to more than one institution in order to facilitate

solutions restoring the financial position of the institution concerned.

The assessment shall take the form of a joint decision

(a)

where the Authority is the consolidating supervisor,

of the Authority and the relevant European regulatory

authorities; or

(b) where the Authority is responsible for supervision

on an individual basis of a subsidiary of a Union parent

undertaking,

of the Authority, the European regulatory authority acting as the

consolidating supervisor and the other relevant European regulatory

authorities responsible for supervision on an individual basis of other

subsidiaries of the Union parent undertaking. The joint decision shall

be reached within five days from the date of the notification referred

to in Article 30(1) of the BRRD. The joint decision shall be reasoned

and set out in a document, which shall be provided by the Authority,

where it is the consolidating supervisor to the Union parent

undertaking

Provided that, the Authority may request the EBA to assist

the authorities mentioned in this sub-regulation in reaching an

agreement in accordance with Article 31 of Regulation (EU) No

1093/2010.

(7) In the absence of a joint decision within five days, where

the Authority is either the consolidating supervisor or the Authority

responsible for supervision on an individual basis of a subsidiary, it

may take an individual decision on the appointment of a temporary

administrator to the institution for which it has responsibility and on

the application of any of the measures in regulation 27.

(8) Where the Authority does not agree with a decision

notified by the European regulatory authority acting as the

consolidating supervisor in accordance with Article 30(1) of the

BRRD, a decision notified by an European regulatory authority

responsible for supervision on an individual basis of a subsidiary of a

Union parent undertaking in accordance with Article 30(3), or in the

absence of a joint decision under sub-regulation (6) and (7), the

Authority may refer the matter to the EBA in accordance with sub-

regulation (9).

(9) The Authority may request the EBA to assist the

authorities mentioned in this regulation that intend to apply one or

more of the measures in paragraph (a) of Article 27(1) of the BRRD

with respect to the paragraphs (4), (10), (11) and (19) of Section A of

the Annex to the BRRD, in paragraph (e) of Article 27(1) of the

BRRD or in paragraph (g) of Article 27(1) of the BRRD in reaching

an agreement in accordance with Article 19(3) of Regulation (EU) No

1093/2010.

(10) The decision of the Authority shall be reasoned. The

decision shall take into account the views and reservations of the

European regulatory authorities concerned expressed during the

consultation period referred to in Article 30(1) or (3) of the BRRD or

the five-day period referred to in sub-regulations (6) and (7) as well

as the potential impact of the decision on financial stability in Malta

and in the Member States concerned. The Authority shall provide its

decisions: where the Authority is the consolidating supervisor, to the

Union parent undertaking; or, where the Authority is responsible for a

subsidiary, to the subsidiary concerned.

(11) In the cases referred to in Article 30(6) of the BRRD,

where, before the end of the consultation period referred to in Article

30(1) and (3) of the BRRD or at the end of the five-day period

referred to in sub-regulations (6) and (7), any of the authorities

mentioned in this regulation has referred the matter to the EBA in

accordance with Article 19(3) of Regulation (EU) No 1093/2010, the

Authority and the European regulatory authorities concerned shall

defer their decisions and await any decision that the EBA may take in

accordance with Article 19(3) of that Regulation, and shall take their

decision in accordance with the decision of the EBA. The five-day

period shall be deemed to be the conciliation period within the

meaning of that Regulation. The matter shall not be referred to the

EBA after the end of the five-day period or after a joint decision has

been reached.

(12) The Authority may, in the cases referred to in sub-

regulation (9), before the end of the consultation period referred to in

Article 30(1) and (3) of the BRRD or at the end of the five-day period

referred to in sub-regulation (7), refer the matter to the EBA in

accordance with Article 19(3) of Regulation (EU) No 1093/2010. The

five-day period shall be deemed to be the conciliation period within

the meaning of that Regulation. The matter shall not be referred to the

EBA after the end of the five-day period or after a joint decision has

been reached.

(13) In the absence of a decision by the EBA within three days,

individual decisions taken in accordance with Article 30(1) or (3) of

the BRRD, or sub-regulation (7), shall apply.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 31 — Recovery and Resolution Regulations, 2015 Open official source

(1) When applying the resolution tools and exercising Resolution

the resolution powers, the Resolution Committee shall have regard to objectives.

the resolution objectives, and choose the tools and powers that best

achieve the objectives that are relevant in the circumstances of the

case.

(2) The resolution objectives referred to in sub-regulation (1)

(a)

to ensure the continuity of critical functions;

(b) to avoid a significant adverse effect on the financial

system, in particular by preventing contagion, including to

market infrastructures, and by maintaining market discipline;

(c)

to protect public funds by minimising reliance on

extraordinary public financial support;

(d) to protect depositors covered by Directive 2014/49/

EU and investors covered by Directive 97/9/EC;

(e)

to protect client funds and client assets

Provided that, when pursuing the above objectives, the

Resolution Committee shall seek to minimise the cost of resolution

and avoid destruction of value unless necessary to achieve the

resolution objectives.

(3) Subject to different provisions of these regulations, the

resolution objectives are of equal significance, and the Resolution

Committee shall balance them as appropriate to the nature and

circumstances of each case.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 32 Conditions for resolution and early intervention — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall take a resolution

action in relation to an institution referred to in paragraph (a) of the

definition "entity" in regulation 2(1) only if the Resolution

Committee considers that all of the following conditions are met

(a)

the determination that the institution is failing or is

likely to fail has been made by the Authority, after consulting

the Resolution Committee; or, subject to the conditions laid

down in sub-regulation (2), by the Resolution Committee after

consulting the Authority;

(b) having regard to timing and other relevant

circumstances, there is no reasonable prospect that any

alternative private sector measures, including measures by an

IPS, or supervisory action, including early intervention

measures or the write-down or conversion of relevant capital

instruments in accordance with regulation 59(2) taken in respect

of the institution, would prevent the failure of the institution

within a reasonable time-frame;

(c)

a resolution action is necessary in the public interest

pursuant to sub-regulation (5)

Provided that, for the purposes of paragraph (c), a

resolution action shall be treated as in the public interest if it is

necessary for the achievement of and is proportionate to one or more

of the resolution objectives referred to in regulation 31 and winding

up of the institution under normal insolvency proceedings would not

meet those resolution objectives to the same extent.

(2) In addition to the Authority, the determination that the

institution is failing or likely to fail under sub-regulation (1)(a) can be

made by the Resolution Committee, after consulting the Authority.

The Authority shall provide the Resolution Committee with any

relevant information that the latter requests in order to perform its

assessment without delay.

(3) The previous adoption of an early intervention measure

according to regulation 27 is not a condition for taking a resolution

action.

(4) For the purposes of sub-regulation (1)(a), an institution

shall be deemed to be failing or likely to fail in one or more of the

following circumstances

(a)

the institution infringes or there are objective

elements to support a determination that the institution will, in

the near future, infringe the requirements for continuing

authorisation in a way that would justify the withdrawal of the

licence by the Authority including but not limited to because the

institution has incurred or is likely to incur losses that will

deplete all or a significant amount of its own funds;

(b) the assets of the institution are or there are objective

elements to support a determination that the assets of the

institution will, in the near future, be less than its liabilities;

(c)

the institution is or there are objective elements to

support a determination that the institution will, in the near

future, be unable to pay its debts or other liabilities as they fall

due;

(d) extraordinary public financial support is required

except when, in order to remedy a serious disturbance in the

economy of Malta or of another Member State and preserve

financial stability, the extraordinary public financial support

takes any of the following forms

(i) a State guarantee to back liquidity facilities

provided by central banks according to the central banks’

conditions;

(ii)

a State guarantee of newly issued liabilities;

or

(iii) an injection of own funds or purchase of

capital instruments at prices and on terms that do not

confer an advantage upon the institution, where neither the

circumstances referred to in paragraphs (a), (b) or (c) of

this sub-regulation nor the circumstances referred to in

regulation 59(3) are present at the time the public support

is granted

Provided that in each of the cases mentioned in paragraph

(d)(i), (ii) and (iii), the guarantee or equivalent measures referred to

therein shall be confined to solvent institutions and shall be

conditional on final approval under the Union State aid framework.

Those measures shall be of a precautionary and temporary nature and

shall be proportionate to remedy the consequences of the serious

disturbance and shall not be used to offset losses that the institution

has incurred or is likely to incur in the near future

Provided further that support measures under paragraph

(d)(iii) shall be limited to injections necessary to address capital

shortfall established in the Maltese, European Union or SSM-wide

stress tests, asset quality reviews or equivalent exercises conducted

by the European Central Bank, the EBA or national authorities, where

applicable, confirmed by the Authority.

(5) For the purposes of sub-regulation (4), State aid rules may

apply in the case of impaired asset measures and recapitalisation,

where it is precautionary, and as prescribed in the Banking Act (State

Aid Rules and Support Measures) Regulations, 2015. A credit

institution, prior to resorting to State aid shall undertake all possible

capital raising measures by private means. If these are not sufficient,

shareholders, hybrid capital and subordinated debt holders shall

contribute to reduce the capital shortfall to the maximum extent

before State aid can be granted. Such a contribution can take the form

of either a conversion into Common Equity Tier 1 or a write-down of

the principal on the instrument, depending on the capital position of

the credit institution. Prior to the granting of State aid, at least one of

the following scenarios should occur

(a)

where the capital ratio of the credit institution

remains above the European regulatory minimum but below the

threshold set by the Authority or the Resolution Committee; or

(b) where the credit institution no longer meets the

minimum regulatory capital requirements

Provided that no contribution from senior debt holders, in

particular from insured deposits; uninsured deposits; bonds and all

other senior debt, will be required

Provided further that this shall not affect the application of

the "no creditor worse off" principle to be carried out under regulation

74.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 33 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee may take a resolution Conditions for

action in relation to a financial institution as defined in paragraph (b) resolution

regard to

of the definition "entity" when the conditions laid down in regulation financial

institutions and

32(1), are met with regard to both the financial institution and with holding

regard to the parent undertaking subject to consolidated supervision. companies.

(2) The Resolution Committee may take a resolution action in

relation to an entity referred to in paragraphs (c) or (d) of the

definition "entity" in regulation 2(1), when the conditions laid down

in regulation 32(1) are met with regard to the entity mentioned above

and with regard to one or more subsidiaries which are institutions or,

where the subsidiary is not established in the European Union, the

relevant third-country authority has determined that it meets the

conditions for resolution under the law of that third country

Provided that when assessing whether the conditions in

regulation 32(1) are met in respect of one or more subsidiaries which

are institutions, the Resolution Committee may: in its capacity as the

resolution authority of the institution, together with the European

resolution authority of the entity referred to in paragraphs (c) or (d) of

the definition "entity" in regulation 2(1); or, where acting as the

Resolution Committee of the entity mentioned above, together with

the European resolution authority of the institution; by way of joint

agreement disregard any intra-group capital or loss transfers between

the entities, including the exercise of write-down or conversion

powers.

(3) Where the subsidiary institutions of a mixed-activity

holding company are held directly or indirectly by an intermediate

financial holding company, resolution actions for the purposes of

group resolution shall be taken in relation to the intermediate

financial holding company, and not in relation to the mixed-activity

holding company.

(4) Subject to sub-regulation (3), notwithstanding the fact that

an entity referred to in paragraphs (c) or (d) of the definition "entity"

in regulation 2(1) does not meet the conditions established in

regulation 32(1), the Resolution Committee may take a resolution

action with regard to such an entity when one or more of the

subsidiaries which are institutions comply with the conditions

established in Article 32(1), (4) and (5) of the BRRD and their assets

and liabilities are such that their failure threatens an institution or the

group as a whole or Maltese insolvency law requires that groups be

treated as a whole and resolution action, with regard to the entity

referred to in paragraph (c) or (d) of the definition "entity" in

regulation 2(1), is necessary for the resolution of such subsidiaries

which are institutions or for the resolution of the group as a whole

Provided that when assessing whether the conditions in

regulation 32(1) are met in respect of one or more subsidiaries which

are institutions, the Resolution Committee may: in its capacity as the

resolution authority of the institution, together with the European

resolution authority of the entity referred to in paragraphs (c) or (d) of

the definition "entity" in regulation 2(1); or, where acting as the

resolution authority of the entity mentioned above, together with the

European resolution authority of the institution; by way of joint

agreement, disregard any intra-group capital or loss transfers between

the entities, including the exercise of write-down or conversion

powers.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 34 General principles governing resolution. — Recovery and Resolution Regulations, 2015 Open official source

(1) When applying the resolution tools and exercising

the resolution powers, the Resolution Committee shall take all

appropriate measures to ensure that the resolution action is taken in

accordance with the following principles

(a)

the shareholders of the institution under resolution

bear first losses;

(b) creditors of the institution under resolution bear

losses after the shareholders in accordance with the order of

priority of their claims under normal insolvency proceedings,

save as expressly provided otherwise in these regulations;

(c)

the board of directors and senior management of the

institution under resolution are replaced, except in those cases

when the retention of the board of directors and senior

management, in whole or in part, as appropriate to the

circumstances, is considered to be necessary for the

achievement of the resolution objectives;

(d) the board of directors and senior management of the

institution under resolution shall provide all necessary

assistance for the achievement of the resolution objectives;

(e)

natural and legal persons are made liable, under civil

or criminal law for their responsibility for the failure of the

institution;

(f)

except where otherwise provided in these

regulations, creditors of the same class are treated in an

equitable manner;

(g) no creditor shall incur greater losses than would

have been incurred if the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) had been wound up under normal insolvency proceedings

in accordance with the safeguards in regulations 73 to 75;

(h)

covered deposits are fully protected; and

(i)

resolution action is taken in accordance with the

safeguards in these regulations.

(2) Where an institution is a group entity, the Resolution

Committee shall, without prejudice to regulation 31, apply resolution

tools and exercise resolution powers in a way that minimises the

impact on other group entities and on the group as a whole and

minimises the adverse effects on financial stability in the European

Union, in Malta and in the other Member States, in particular, in the

countries where the group operates.

(3) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall ensure that it

complies with the Union State aid framework, where applicable.

(4) Where the sale of business tool, the bridge institution tool

or the asset separation tool is applied to an institution or an entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1), that institution or entity shall be considered to be the

subject of bankruptcy proceedings or analogous insolvency

proceedings for the purposes of Article 5(1) of Council Directive

2001/23/EC of 12 March 2001 on the approximation of the laws of

the Member States relating to the safeguarding of employees’ rights

in the event of transfers of undertakings, businesses or parts of

undertakings or businesses.

(5) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall inform and

consult employee representatives where appropriate.

(6) The Resolution Committee shall apply resolution tools and

exercise resolution powers without prejudice to provisions on the

representation of employees in the board of directors as provided for

in Maltese law or practice.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 35 Special management. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee may appoint a special

manager to replace the board of directors of the institution under

resolution. The Resolution Committee shall make public the

appointment of a special manager. The special manager shall have the

qualifications, ability and knowledge required to carry out his or her

functions.

(2) The special manager shall have all the powers of the

shareholders and the board of directors of the institution. However,

the special manager may only exercise such powers under the control

of the Resolution Committee.

(3) The special manager shall have the statutory duty to take

all the measures necessary to promote the resolution objectives

referred to in regulation 31 and implement resolution actions

according to the decision of the Resolution Committee. Where

necessary, that duty shall override any other duty of management in

accordance with the statutes of the institution or Maltese law, insofar

as they are inconsistent. Those measures may include an increase of

capital, reorganisation of the ownership structure of the institution or

takeovers by institutions that are financially and organisationally

sound in accordance with the resolution tools referred to in

regulations 37 to 58.

(4) The Resolution Committee may set limits to the action of a

special manager or require that certain acts of the special manager be

subject to the Resolution Committee’s prior consent. The Resolution

Committee may remove the special manager at any time.

(5) The special manager shall draw up reports for the

Resolution Committee on the economic and financial situation of the

institution and on the acts performed in the conduct of his or her

duties, at regular intervals set by the Resolution Committee and at the

beginning and the end of his or her mandate.

(6) A special manager shall not be appointed for more than

one year. That period may be renewed, on an exceptional basis, if the

Resolution Committee determines that the conditions for appointment

of a special manager continue to be met.

(7) Where the Resolution Committee intends to appoint a

special manager in relation to an entity affiliated to a group and one

or more European resolution authorities intend to appoint a special

manager in relation to another entity affiliated to the same group, the

Resolution Committee shall, together with the European resolution

authorities concerned, consider whether it is more appropriate to

appoint the same special manager for all the entities concerned in

order to facilitate solutions redressing the financial soundness of the

entities concerned.

(8) In the event of insolvency, where Maltese law provides for

the appointment of insolvency management, such management may

constitute special management as referred to in this regulation.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 36 — Recovery and Resolution Regulations, 2015 Open official source

(1) Before taking resolution action or exercising the Valuation for

power to write down or convert relevant capital instruments, the the

resolution.

Resolution Committee shall ensure that a fair, prudent and realistic

valuation of the assets and liabilities of the institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) is carried out by a person independent from any public

authority, including the Resolution Committee, and the institution or

entity referred to in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1). Subject to sub-regulation (13) and to regulation 85,

where all the requirements laid down in this regulation are met, the

valuation shall be considered to be definitive.

(2) Where an independent valuation according to sub-

regulation (1) is not possible, the Resolution Committee may carry

out a provisional valuation of the assets and liabilities of the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1), in accordance with sub-

regulation (9).

(3) The objective of the valuation shall be to assess the value

of the assets and liabilities of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

that meets the conditions for resolution of regulations 32 and 33.

(4) The purposes of the valuation shall be

(a)

to inform the determination of whether the

conditions for resolution or the conditions for the write-down or

conversion of capital instruments are met;

(b) if the conditions for resolution are met, to inform the

decision on the appropriate resolution action to be taken in

respect of the institution or entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1);

(c)

when the power to write down or convert relevant

capital instruments is applied, to inform the decision on the

extent of the cancellation or dilution of shares or other

instruments of ownership, and the extent of the write-down or

conversion of relevant capital instruments;

(d) when the bail-in tool is applied, to inform the

decision on the extent of the write-down or conversion of

eligible liabilities;

(e)

when the bridge institution tool or asset separation

tool is applied, to inform the decision on the assets, rights,

liabilities or shares or other instruments of ownership to be

transferred and the decision on the value of any consideration to

be paid to the institution under resolution or, as the case may be,

to the owners of the shares or other instruments of ownership;

(f)

when the sale of business tool is applied, to inform

the decision on the assets, rights, liabilities or shares or other

instruments of ownership to be transferred and to inform the

Resolution Committee’s understanding of what constitutes

commercial terms for the purposes of regulation 38;

(g) in all cases, to ensure that any losses on the assets of

the institution or entity referred to in paragraphs (b), (c) or (d) of

the definition "entity" in regulation 2(1) are fully recognised at

the moment the resolution tools are applied or the power to

write down or convert relevant capital instruments is exercised.

(5) Without prejudice to the Union State aid framework, where

applicable, the valuation shall be based on prudent assumptions,

including as to rates of default and severity of losses. The valuation

shall not assume any potential future provision of extraordinary

public financial support or central bank emergency liquidity

assistance or any central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate terms to the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) from the point at which

resolution action is taken or the power to write down or convert

relevant capital instruments is exercised. Furthermore, the valuation

shall take account of the fact that, if any resolution tool is applied

(a)

the Resolution Committee and any financing

arrangement acting pursuant to regulation 101 may recover any

reasonable expenses properly incurred from the institution

under resolution, in accordance with regulation 37(7);

(b) the resolution financing arrangement may charge

interest or fees in respect of any loans or guarantees provided to

the institution under resolution, in accordance with regulation

101. (6) The valuation shall be supplemented by the following

information as appearing in the accounting books and records of the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1)

(a)

an updated balance sheet and a report on the

financial position of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1);

(b) an analysis and an estimate of the accounting value

of the assets;

(c)

the list of outstanding on balance sheet and off-

balance sheet liabilities shown in the books and records of the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1), with an indication of the

respective credits and priority levels under the applicable

insolvency law.

(7) Where appropriate, to inform the decisions referred to in

sub-regulation (4)(e) and (f), the information in sub-regulation (6)(b)

may be complemented by an analysis and estimate of the value of the

assets and liabilities of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

on a market value basis.

(8) The valuation shall indicate the subdivision of the creditors

in classes in accordance with their priority levels under the applicable

insolvency law and an estimate of the treatment that each class of

shareholders and creditors would have been expected to receive, if the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) were wound up under normal

insolvency proceedings

Provided that, that estimate shall not affect the application

of the "no creditor worse off" principle to be carried out under

regulation 74.

(9) Where due to the urgency in the circumstances of the case

it is not possible to comply with the requirements in sub-regulations

(6) and (8) or sub-regulation (2) applies, a provisional valuation shall

be carried out. The provisional valuation shall comply with the

requirements in sub-regulation (3) and in so far as reasonably

practicable in the circumstances with the requirements of sub-

regulations (1), (6) and (8). The provisional valuation referred to in

this sub-regulation shall include a buffer for additional losses, with

appropriate justification.

(10) A valuation that does not comply with all the requirements

laid down in this regulation shall be considered to be provisional until

an independent person has carried out a valuation that is fully

compliant with all the requirements laid down in this regulation. That

ex-post definitive valuation shall be carried out as soon as

practicable. It may be carried out either separately from the valuation

referred to in regulation 74, or simultaneously with and by the same

independent person as that valuation, but shall be distinct from it. The

purposes of the ex-post definitive valuation shall be

(a)

to ensure that any losses on the assets of the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) are fully recognised in the

books of accounts of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1);

(b) to inform a decision to write back creditors’ claims

or to increase the value of the consideration paid, in accordance

with sub-regulation (11).

(11) In the event that the ex-post definitive valuation’s estimate

of the net asset value of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

is higher than the provisional valuation’s estimate of the net asset

value of the institution or entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1), the Resolution

Committee may

(a)

exercise its power to increase the value of the claims

of creditors or owners of relevant capital instruments which

have been written down under the bail-in tool;

(b) instruct a bridge institution or asset management

vehicle to make a further payment of consideration in respect of

the assets, rights, liabilities to the institution under resolution, or

as the case may be, in respect of the shares or instruments of

ownership to the owners of the shares or other instruments of

ownership.

(12) Notwithstanding sub-regulation (1), a provisional

valuation conducted in accordance with sub-regulations (9) and (10)

shall be a valid basis for the Resolution Committee to take resolution

actions, including taking control of a failing institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1), or to exercise the write-down or conversion power of

capital instruments.

(13) The valuation shall be an integral part of the decision to

apply a resolution tool or exercise a resolution power, or the decision

to exercise the write-down or conversion power of capital

instruments. The valuation itself shall not be subject to a separate

right of appeal but may be subject to an appeal together with the

decision in accordance with regulation 85.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 37 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall have the necessary General

powers to apply the resolution tools to institutions and to entities principles

resolution tools.

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that meet the applicable conditions for resolution.

(2) Where the Resolution Committee decides to apply a

resolution tool to an institution or entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1), and that

resolution action would result in losses being borne by creditors or

their claims being converted, the Resolution Committee shall exercise

the power to write down and convert capital instruments in

accordance with regulation 59 immediately before or together with

the application of the resolution tool.

(3) The resolution tools referred to in sub-regulation (1) are

the following

(a)

the sale of business tool;

(b)

the bridge institution tool;

(c)

the asset separation tool;

(d)

the bail-in tool.

(4) Subject to sub-regulation (5), the Resolution Committee

may apply the resolution tools individually or in any combination.

(5) The Resolution Committee may apply the asset separation

tool only together with another resolution tool.

(6) Where only the resolution tools referred to in sub-

regulation (3)(a) or (b) are used, and they are used to transfer only

part of the assets, rights or liabilities of the institution under

resolution, the residual institution or entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) from which

the assets, rights or liabilities have been transferred, shall be wound

up under normal insolvency proceedings. Such winding up shall be

done within a reasonable time-frame, having regard to any need for

that institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) to provide services or support

pursuant to regulation 65 in order to enable the recipient to carry out

the activities or services acquired by virtue of that transfer, and any

other reason that the continuation of the residual institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) is necessary to achieve the resolution objectives or

comply with the principles referred to in regulation 34.

(7) The Resolution Committee and any financing arrangement

acting pursuant to regulation 101 may recover any reasonable

expenses properly incurred in connection with the use of the

resolution tools or powers or government financial stabilisation tools

in one or more of the following ways

(a)

as a deduction from any consideration paid by a

recipient to the institution under resolution or, as the case may

be, to the owners of the shares or other instruments of

ownership;

(b) from the institution under resolution, as a preferred

creditor; or

(c)

from any proceeds generated as a result of the

termination of the operation of the bridge institution or the asset

management vehicle, as a preferred creditor.

(8) Any provisions under normal insolvency proceedings

relating to the voidability or unenforceability of legal acts detrimental

to creditors shall not apply to transfers of assets, rights or liabilities

from an institution under resolution to another entity by virtue of the

application of a resolution tool or exercise of a resolution power, or

use of a government financial stabilisation tool.

(9) The Resolution Committee may make use of additional

tools and powers exercisable where an institution or entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) meets the conditions for resolution, provided that

(a)

when applied to a cross-border group, those

additional powers do not pose obstacles to effective group

resolution; and

(b) they are consistent with the resolution objectives

and the general principles governing resolution referred to in

regulations 31 and 34.

(10) In the very extraordinary situation of a systemic crisis, the

Resolution Committee may seek funding from alternative financing

sources through the use of government stabilisation tools provided for

in regulations 56 to 58 when the following conditions are met

(a)

a contribution to loss absorption and recapitalisation

equal to an amount not less than 8% of total liabilities including

own funds of the institution under resolution, measured at the

time of resolution action in accordance with the valuation

provided for in regulation 36, has been made by the

shareholders and the holders of other instruments of ownership,

the holders of relevant capital instruments and other eligible

liabilities through write-down, conversion or otherwise;

(b) it shall be conditional on prior and final approval

under the Union State aid framework.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 38 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall have the power to The sale of

business tool.

transfer to a purchaser that is not a bridge institution

(a)

shares or other instruments of ownership issued by

an institution under resolution;

(b) all or any assets, rights or liabilities of an institution

under resolution

Provided that, subject to sub-regulations (8) and (9) and to

regulation 85, the transfer referred to in this sub-regulation shall take

place without obtaining the consent of the shareholders of the

institution under resolution or any third party other than the

purchaser, and without complying with any procedural requirements

under company or securities law other than those included in

regulation 39, and it shall not constitute a default or termination event

in relation to any obligation relating to such assets or liabilities or

under any contract to which the failed institution is a party.

(2) A transfer made pursuant to sub-regulation (1) shall be

made on commercial terms, having regard to the circumstances, and

in accordance with the Union State aid framework.

(3) In accordance with sub-regulation (2), the Resolution

Committee shall take all reasonable steps to obtain commercial terms

for the transfer that conform with the valuation conducted under

regulation 36, having regard to the circumstances of the case.

(4) Subject to regulation 37(7), any consideration paid by the

purchaser shall benefit

(a)

the owners of the shares or other instruments of

ownership, where the sale of business has been effected by

transferring shares or instruments of ownership issued by the

institution under resolution from the holders of those shares or

instruments to the purchaser;

(b) the institution under resolution, where the sale of

business has been effected by transferring some or all of the

assets or liabilities of the institution under resolution to the

purchaser.

(5) When applying the sale of business tool the Resolution

Committee may exercise the transfer power more than once in order

to make supplemental transfers of shares or other instruments of

ownership issued by an institution under resolution or, as the case

may be, assets, rights or liabilities of the institution under resolution.

(6) Following an application of the sale of business tool, the

Resolution Committee may, with the consent of the purchaser,

exercise the transfer powers in respect of assets, rights or liabilities

transferred to the purchaser in order to transfer the assets, rights or

liabilities back to the institution under resolution, or the shares or

other instruments of ownership back to their original owners, and the

institution under resolution or original owners shall be obliged to take

back any such assets, rights or liabilities, or shares or other

instruments of ownership.

(7) A purchaser shall have the appropriate authorisation to

carry out the business it acquires when the transfer is made pursuant

to sub-regulation (1). The Authority shall ensure that an application

for a licence shall be considered, in conjunction with the transfer, in a

timely manner.

(8) By way of derogation from Articles 22 to 25 of the CRD,

from the requirement to inform the Authority in Article 26 of the

CRD, articles 10, 10A and 10B of the Investment Services Act and

the Investment Services Rules for Investment Services Providers,

where a transfer of shares or other instruments of ownership by virtue

of an application of the sale of business tool would result in the

acquisition of or increase in a qualifying holding in an institution of a

kind referred to in Article 22(1) of the CRD or article 10 of the

Investment Services Act, the Authority shall carry out the assessment

required under those Articles (and articles) in a timely manner that

does not delay the application of the sale of business tool and prevent

the resolution action from achieving the relevant resolution

objectives.

(9) Where the Authority has not completed the assessment

referred to in sub-regulation (8) from the date of transfer of shares or

other instruments of ownership in the application of the sale of

business tool by the Resolution Committee, the following provisions

shall apply

(a)

such a transfer of shares or other instruments of

ownership to the acquirer shall have immediate legal effect;

(b) during the assessment period and during any

divestment period provided by paragraph (f), the acquirer’s

voting rights attached to such shares or other instruments of

ownership shall be suspended and vested solely in the

Resolution Committee, which shall have no obligation to

exercise any such voting rights and which shall have no liability

whatsoever for exercising or refraining from exercising any

such voting rights;

(c)

during the assessment period and during any

divestment period provided by paragraph (f), the penalties and

other measures in terms of article 35B of the Banking Act, Cap. 371.

regulations 6 and 7 of the Administrative Penalties, Measures S.L. 371.05

and Investigatory Powers Regulations made under the Banking

Act and regulations 6 and 7 of the CRD (Administrative S.L. 370.25

Penalties, Measures and Investigatory Powers) Regulations

made under the Investment Services Act, for infringing the

requirements for acquisitions or disposals of qualifying

holdings, shall not apply to such a transfer of shares or other

instruments of ownership;

(d) promptly upon completion of the assessment by the

Authority, the Authority shall notify the Resolution Committee

and the acquirer in writing of whether the Authority approves

or, in accordance with article 13A(11) of the Banking Act, Cap. 371.

opposes such a transfer of shares or other instruments of

ownership to the acquirer;

(e)

if the Authority approves such a transfer of shares or

other instruments of ownership to the acquirer, then the voting

rights attached to such shares or other instruments of ownership

shall be deemed to be fully vested in the acquirer immediately

upon receipt by the Resolution Committee and the acquirer of

such an approval notice from the Authority;

(f)

if the Authority opposes such a transfer of shares or

other instruments of ownership to the acquirer, then

(i) the voting rights attached to such shares or

other instruments of ownership as provided by paragraph

(b) shall remain in full force and effect;

(ii) the Resolution Committee may require the

acquirer to divest such shares or other instruments of

ownership within a divestment period determined by the

Resolution Committee having taken into account

prevailing market conditions; and

(iii) if the acquirer does not complete such a

divestment within the divestment period established by the

Resolution Committee, then the Authority, with the

consent of the Resolution Committee, may impose on the

acquirer penalties and other measures for infringing the

requirements for acquisitions or disposals of qualifying

holdings contemplated by article 35B of the Banking Act,

regulations 6 and 7 of the Administrative Penalties,

Measures and Investigatory Powers Regulations made

under the Banking Act and regulations 6 and 7 of the CRD

(Administrative Penalties, Measures and Investigatory

Powers) Regulations made under the Investment Services

Act.

(10) Transfers made by virtue of the sale of business tool shall

be subject to the safeguards referred to in regulations 73 to 80.

(11) For the purposes of exercising the rights to provide

services or to establish itself in another Member State in accordance

with the CRD or Directive 2014/65/EU, the purchaser shall be

considered to be a continuation of the institution under resolution,

and may continue to exercise any such right that was exercised by the

institution under resolution in respect of the assets, rights or liabilities

transferred.

(12) The purchaser referred to in sub-regulation (1) may

continue to exercise the rights of membership and access to payment,

clearing and settlement systems, stock exchanges, investor

compensation schemes and deposit guarantee schemes of the

institution under resolution, provided that it meets the membership

and participation criteria for participation in such systems

Provided that

(a)

access shall not be denied on the ground that the

purchaser does not possess a rating from a credit rating agency,

or that rating is not commensurate to the rating levels required

to be granted access to the systems referred to in this sub-

regulation;

(b) where the purchaser does not meet the membership

or participation criteria for a relevant payment, clearing or

settlement system, stock exchange, investor compensation

scheme or deposit guarantee scheme, the rights referred to in

this sub-regulation shall be exercised for such a period of time

as may be specified by the Resolution Committee, not

exceeding twenty-four months, renewable on application by the

purchaser to the Resolution Committee.

(13) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred shall not have any

rights over or in relation to the assets, rights or liabilities transferred.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 39 — Recovery and Resolution Regulations, 2015 Open official source

(1) Subject to sub-regulation (3), when applying the sale Sale of business

of business tool to an institution or entity referred to in paragraphs tool

requirements.

(b), (c) or (d) of the definition "entity" in regulation 2(1), the

Resolution Committee shall market, or make arrangements for the

marketing of the assets, rights, liabilities, shares or other instruments

of ownership of that institution that the authority intends to transfer.

Pools of rights, assets, and liabilities may be marketed separately.

(2) Without prejudice to the Union State aid framework, where

applicable, the marketing referred to in sub-regulation (1) shall be

carried out in accordance with the following criteria

(a)

it shall be as transparent as possible and shall not

materially misrepresent the assets, rights, liabilities, shares or

other instruments of ownership of that institution that the

Resolution Committee intends to transfer, having regard to the

circumstances and in particular the need to maintain financial

stability;

(b) it shall not unduly favour or discriminate between

potential purchasers;

(c)

it shall be free from any conflict of interest;

(d) it shall not confer any unfair advantage on a

potential purchaser;

(e)

it shall take account of the need to effect a rapid

resolution action;

(f)

it shall aim at maximising, as far as possible, the

sale price for the shares or other instruments of ownership,

assets, rights or liabilities involved

Provided that, subject to paragraph (b), the principles

referred to in this sub-regulation shall not prevent the Resolution

Committee from soliciting particular potential purchasers

Provided further, that any public disclosure of the

marketing of the institution or entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) that would

otherwise be required in accordance with Article 17(1) of Regulation

(EU) No 596/2014 of the European Parliament and of the Council of

16 April 2014 on market abuse (market abuse regulation) and

repealing Directive 2003/6/EC of the European Parliament and of the

Council and Commission Directives 2003/124/EC, 2003/125/EC and

2004/72/EC Text with EEA relevance, may be delayed in accordance

with Article 17(4) or (5) of that Regulation.

(3) The Resolution Committee may apply the sale of business

tool without complying with the requirement to market as laid down

in sub-regulation (1) when it determines that compliance with those

requirements would be likely to undermine one or more of the

resolution objectives and in particular if the following conditions are

met

(a)

it considers that there is a material threat to financial

stability arising from or aggravated by the failure or likely

failure of the institution under resolution; and

(b) it considers that compliance with those requirements

would be likely to undermine the effectiveness of the sale of

business tool in addressing that threat or achieving the

resolution objective referred to in paragraph (b) of regulation

31(2).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 40 Bridge institution tool. — Recovery and Resolution Regulations, 2015 Open official source

(1) In order to give effect to the bridge institution tool

and having regard to the need to maintain critical functions in the

bridge institution, the Resolution Committee shall have the power to

transfer to a bridge institution

(a)

shares or other instruments of ownership issued by

one or more institutions under resolution;

(b) all or any assets, rights or liabilities of one or more

institutions under resolution

Provided that, subject to regulation 85, the transfer referred

to in this sub-regulation may take place without obtaining the consent

of the shareholders of the institutions under resolution or any third

party other than the bridge institution, and without complying with

any procedural requirements under company or securities law, and it

shall not constitute a default or termination event in relation to any

obligation relating to such assets or liabilities or under any contract to

which the failed institution is a party.

(2) The bridge institution shall be a legal person that meets all

of the following requirements

(a)

it is wholly or partially owned by one or more public

authorities which may include the Resolution Committee or the

resolution financing arrangement and is controlled by the

Resolution Committee;

(b) it is created for the purpose of receiving and holding

some or all of the shares or other instruments of ownership

issued by an institution under resolution or some or all of the

assets, rights and liabilities of one or more institutions under

resolution with a view to maintaining access to critical functions

and selling the institution or entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1)

Provided that, the application of the bail-in tool for the

purpose referred to in paragraph (b) of regulation 43(2) shall not

interfere with the ability of the Resolution Committee to control the

bridge institution.

(3) When applying the bridge institution tool, the Resolution

Committee shall ensure that the total value of liabilities transferred to

the bridge institution does not exceed the total value of the rights and

assets transferred from the institution under resolution or provided by

other sources.

(4) Subject to regulation 37(7), any consideration paid by the

bridge institution shall benefit

(a)

the owners of the shares or instruments of

ownership, where the transfer to the bridge institution has been

effected by transferring shares or instruments of ownership

issued by the institution under resolution from the holders of

those shares or instruments to the bridge institution;

(b) the institution under resolution, where the transfer to

the bridge institution has been effected by transferring some or

all of the assets or liabilities of the institution under resolution

to the bridge institution.

(5) When applying the bridge institution tool, the Resolution

Committee may exercise the transfer power more than once in order

to make supplemental transfers of shares or other instruments of

ownership issued by an institution under resolution or, as the case

may be, assets, rights or liabilities of the institution under resolution.

(6) Following an application of the bridge institution tool, the

Resolution Committee may

(a)

transfer rights, assets or liabilities back from the

bridge institution to the institution under resolution, or the

shares or other instruments of ownership back to their original

owners, and the institution under resolution or original owners

shall be obliged to take back any such assets, rights or

liabilities, or shares or other instruments of ownership, provided

that the conditions laid down in sub-regulation (7) are met;

(b) transfer, shares or other instruments of ownership, or

assets, rights or liabilities from the bridge institution to a third

party.

(7) The Resolution Committee may transfer shares or other

instruments of ownership, or assets, rights or liabilities back from the

bridge institution in one of the following circumstances

(a)

the possibility that the specific shares or other

instruments of ownership, assets, rights or liabilities might be

transferred back is stated expressly in the instrument by which

the transfer was made;

(b) the specific shares or other instruments of

ownership, assets, rights or liabilities do not in fact fall within

the classes of, or meet the conditions for transfer of shares or

other instruments of ownership, assets, rights or liabilities

specified in the instrument by which the transfer was made

Provided that such a transfer back may be made within any

period, and shall comply with any other conditions, stated in that

instrument for the relevant purpose.

(8) Transfers between the institution under resolution, or the

original owners of shares or other instruments of ownership, on the

one hand, and the bridge institution on the other, shall be subject to

the safeguards referred to in regulations 73 to 80.

(9) For the purposes of exercising the rights to provide

services or to establish itself in another Member State in accordance

with the CRD or Directive 2014/65/EU, a bridge institution shall be

considered to be a continuation of the institution under resolution,

and may continue to exercise any such right that was exercised by the

institution under resolution in respect of the assets, rights or liabilities

transferred

Provided that, for other purposes, the Resolution

Committee may require that a bridge institution is considered to be a

continuation of the institution under resolution, and is able to

continue to exercise any right that was exercised by the institution

under resolution in respect of the assets, rights or liabilities

transferred.

(10) The bridge institution may continue to exercise the rights

of membership and access to payment, clearing and settlement

systems, stock exchanges, investor compensation schemes and

deposit guarantee schemes of the institution under resolution,

provided that it meets the membership and participation criteria for

participation in such systems

Provided that

(a)

access shall not be denied on the ground that the

bridge institution does not possess a rating from a credit rating

agency, or that rating is not commensurate to the rating levels

required to be granted access to the systems referred to in this

sub-regulation;

(b) where the bridge institution does not meet the

membership or participation criteria for a relevant payment,

clearing or settlement system, stock exchange, investor

compensation scheme or deposit guarantee scheme, the rights

referred to in this sub-regulation shall be exercised for such a

period of time as may be specified by the Resolution

Committee, not exceeding 24 months, renewable on application

by the bridge institution to the Resolution Committee.

(11) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred to the bridge

institution shall not have any rights over or in relation to the assets,

rights or liabilities transferred to the bridge institution, its board of

directors or senior management.

(12) The objectives of the bridge institution shall not imply any

duty or responsibility to shareholders or creditors of the institution

under resolution, and the board of directors or senior management

shall have no liability to such shareholders or creditors for acts and

omissions in the discharge of their duties unless the act or omission

implies gross negligence or serious misconduct which directly affects

rights of such shareholders or creditors.

(13) The Resolution Committee may further limit the liability

of a bridge institution and its board of directors or senior management

for acts and omissions in the discharge of their duties.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 41 Operation of a bridge institution. — Recovery and Resolution Regulations, 2015 Open official source

(1) The operation of a bridge institution shall respect the

following requirements

(a)

the contents of the bridge institution’s constitutional

documents are approved by the Resolution Committee;

(b) subject to the bridge institution’s ownership

structure, the Resolution Committee either appoints or approves

the board of directors of the bridge institution;

(c)

the

Resolution

Committee

approves

the

remuneration of the directors and determines their appropriate

responsibilities;

(d) the Resolution Committee approves the strategy and

risk profile of the bridge institution;

(e)

the bridge institution is licenced in accordance with

the CRD or Directive 2014/65/EU, as applicable, and has the

necessary licence to carry out the activities or services that it

acquires by virtue of a transfer made pursuant to regulation 63;

(f)

the bridge institution complies with the

requirements of, and is subject to supervision in accordance

with the CRD, CRR and Directive 2014/65/EU, as applicable;

(g) the operation of the bridge institution shall be in

accordance with the Union State aid framework and the

Resolution Committee may specify restrictions on its operations

accordingly

Provided that, notwithstanding the provisions referred to in

paragraphs (e) and (f) and where necessary to meet the resolution

objectives, the bridge institution may be established and licensed

without complying with the CRD or Directive 2014/65/EU for a short

period of time at the beginning of its operation. To that end, the

Resolution Committee shall submit a request in that sense to the

Authority. If the Authority decides to grant such a licence, it shall

indicate the period for which the bridge institution is waived from

complying with the requirements of those Directives.

(2) Subject to any restrictions imposed in accordance with

European Union or Maltese competition rules, the management of the

bridge institution shall operate the bridge institution with a view to

maintaining access to critical functions and selling the institution or

entity referred to in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1), its assets, rights or liabilities, to one or more

private sector purchasers when conditions are appropriate and within

the period specified in sub-regulation (4) or, where applicable, sub-

regulation (6).

(3) The Resolution Committee shall take a decision that the

bridge institution is no longer a bridge institution within the meaning

of regulation 40(2) in any of the following cases, whichever occurs

first

(a)

the bridge institution merges with another entity;

(b) the bridge institution

ceases

to

meet

the

requirements of regulation 40(2);

(c)

the sale of all or substantially all of the bridge

institution’s assets, rights or liabilities to a third party;

(d) the expiry of the period specified in sub-regulation

(5) or, where applicable, sub-regulation (6);

(e)

the bridge institution’s assets are completely wound

down and its liabilities are completely discharged.

(4) Where the Resolution Committee seeks to sell the bridge

institution or its assets, rights or liabilities, the bridge institution or

the relevant assets or liabilities shall be marketed openly and

transparently, and the sale shall not materially misrepresent the

institution or the relevant assets or liabilities or unduly favour or

discriminate between potential purchasers. Any such sale shall be

made on commercial terms, having regard to the circumstances and in

accordance with the Union State aid framework.

(5) If none of the outcomes referred to in paragraphs (a), (b),

(c) and (e) of sub-regulation (3) applies, the Resolution Committee

shall terminate the operation of a bridge institution as soon as

possible and in any event two years after the date on which the last

transfer from an institution under resolution pursuant to the bridge

institution tool was made.

(6) The Resolution Committee may extend the period referred

to in sub-regulation (5) for one or more additional one-year periods

where such an extension

(a)

supports the outcomes referred to in sub-regulation

(3)(a), (b), (c) or (e); or

(b) is necessary to ensure the continuity of essential

banking or financial services.

(7) Any decision of the Resolution Committee to extend the

period referred to in sub-regulation (5) shall be reasoned and shall

contain a detailed assessment of the situation, including of the market

conditions and outlook that justifies the extension.

(8) Where the operations of a bridge institution are terminated

in the circumstances referred to in sub-regulation (3)(c) or (d), the

bridge institution shall be wound up under normal insolvency

proceedings

Provided that, subject to regulation 37(7), any proceeds

generated as a result of the termination of the operation of the bridge

institution shall benefit the shareholders of the bridge institution.

(9) Where a bridge institution is used for the purpose of

transferring assets and liabilities of more than one institution under

resolution, the obligation referred to in sub-regulation (8) shall refer

to the assets and liabilities transferred from each of the institutions

under resolution and not to the bridge institution itself.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 42 Asset separation tool. — Recovery and Resolution Regulations, 2015 Open official source

(1) In order to give effect to the asset separation tool,

the Resolution Committee shall have the power to transfer assets,

rights or liabilities of an institution under resolution or a bridge

institution to one or more asset management vehicles

Provided that, subject to regulation 85, the transfer referred

to in this sub-regulation may take place without obtaining the consent

of the shareholders of the institutions under resolution or any third

party other than the bridge institution, and without complying with

any procedural requirements under company or securities law.

(2) For the purposes of the asset separation tool, an asset

management vehicle shall be a legal person that meets all of the

following requirements

(a)

it is wholly or partially owned by one or more public

authorities which may include the Resolution Committee or the

resolution financing arrangement and is controlled by the

Resolution Committee;

(b) it has been created for the purpose of receiving some

or all of the assets, rights and liabilities of one or more

institutions under resolution or a bridge institution.

(3) The asset management vehicle shall manage the assets

transferred to it with a view to maximising their value through

eventual sale or orderly wind down.

(4) The Resolution Committee shall

(a)

approve the contents of the asset management

vehicle’s constitutional documents;

(b) subject to the asset management vehicle’s ownership

structure, either appoint or approve the vehicle’s board of

directors;

(c)

approve the remuneration of the directors and

determine their appropriate responsibilities;

(d) approve the strategy and risk profile of the asset

management vehicle; and

(e)

ensure that the operation of the asset management

vehicle respects the provisions of paragraphs (a) to (d) of this

sub-regulation.

(5) The Resolution Committee may exercise the power specified

in sub-regulation (1) to transfer assets, rights or liabilities only if

(a)

the situation of the particular market for those assets

is of such a nature that the liquidation of those assets under

normal insolvency proceedings could have an adverse effect on

one or more financial markets;

(b) such a transfer is necessary to ensure the proper

functioning of the institution under resolution or bridge

institution; or

(c)

such a transfer is necessary to maximise liquidation

proceeds.

(6) When applying the asset separation tool, the Resolution

Committee shall determine the consideration for which assets, rights

and liabilities are transferred to the asset management vehicle in

accordance with the principles established in regulation 36 and in

accordance with the Union State aid framework. This sub-regulation

does not prevent the consideration having nominal or negative value.

(7) Subject to regulation 37(7), any consideration paid by the

asset management vehicle in respect of the assets, rights or liabilities

acquired directly from the institution under resolution shall benefit

the institution under resolution. Consideration may be paid in the

form of debt issued by the asset management vehicle.

(8) Where the bridge institution tool has been applied, an asset

management vehicle may, subsequent to the application of the bridge

institution tool, acquire assets, rights or liabilities from the bridge

institution.

(9) The Resolution Committee may transfer assets, rights or

liabilities from the institution under resolution to one or more asset

management vehicles on more than one occasion and transfer assets,

rights or liabilities back from one or more asset management vehicles

to the institution under resolution provided that the conditions

specified in sub-regulation (10) are met. The institution under

resolution shall be obliged to take back any such assets, rights or

liabilities.

(10) The Resolution Committee may transfer rights, assets or

liabilities back from the asset management vehicle to the institution

under resolution in one of the following circumstances

(a)

the possibility that the specific rights, assets or

liabilities might be transferred back is stated expressly in the

instrument by which the transfer was made;

(b) the specific rights, assets or liabilities do not in fact

fall within the classes of, or meet the conditions for transfer of,

rights, assets or liabilities specified in the instrument by which

the transfer was made

Provided that, in either of the cases referred in paragraphs

(a) and (b), the transfer back may be made within any period, and

shall comply with any other conditions, stated in that instrument for

the relevant purpose.

(11) Transfers between the institution under resolution and the

asset management vehicle shall be subject to the safeguards for

partial property transfers specified in regulations 73 to 80.

(12) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred to the asset

management vehicle shall not have any rights over or in relation to

the assets, rights or liabilities transferred to the asset management

vehicle or its board of directors or senior management.

(13) The objectives of an asset management vehicle shall not

imply any duty or responsibility to shareholders or creditors of the

institution under resolution, and the board of directors or senior

management shall have no liability to such shareholders or creditors

for acts and omissions in the discharge of their duties unless the act or

omission implies gross negligence or serious misconduct which

directly affects rights of such shareholders or creditors.

(14) The Resolution Committee may further limit the liability

of an asset management vehicle and its board of directors or senior

management for acts and omissions in the discharge of their duties.

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(1) In order to give effect to the bail-in tool, the The bail-in tool.

Resolution Committee shall have the resolution powers specified in

regulation 63(1).

(2) The Resolution Committee shall apply the bail-in tool to

meet the resolution objectives specified in regulation 31, in

accordance with the resolution principles specified in regulation 34

for any of the following purposes

(a)

to recapitalise an institution or an entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that meets the conditions for resolution to the

extent sufficient to restore its ability to comply with the

conditions for obtaining a licence (to the extent that those

conditions apply to the entity) and to continue to carry out the

activities for which it is licensed under the CRD or Directive

2014/65/EU, where the entity is licensed under those Directives,

and to sustain sufficient market confidence in the institution or

entity;

(b) to convert to equity or reduce the principal amount

of claims or debt instruments that are transferred

(i) to a bridge institution with a view to

providing capital for that bridge institution; or

(ii) under the sale of business tool or the asset

separation tool.

(3) The Resolution Committee may apply the bail-in tool for

the purpose referred to in sub-regulation (2)(a) only if there is a

reasonable prospect that the application of that tool together with

other relevant measures including measures implemented in

accordance with the business reorganisation plan required by

regulation 52 will, in addition to achieving relevant resolution

objectives, restore the institution or entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) in question

to financial soundness and long-term viability

Provided that, where the conditions laid down in this sub-

regulation are not met, the Resolution Committee may apply any of

the resolution tools referred to in regulation 37(3)(a), (b) and (c) and

the bail-in tool referred to in paragraph of sub-regulation (2)(b).

(4) The Resolution Committee may apply the bail-in tool to all

institutions or entities referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) while respecting in each case the

legal form of the institution or entity concerned or may change the

legal form.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 44 Scope of bail-in tool. — Recovery and Resolution Regulations, 2015 Open official source

(1) The bail-in tool may be applied to all liabilities of an

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) that are not excluded from the

scope of that tool pursuant to sub-regulations (2) or (3)

Provided that contributions from senior debt holders, in

particular from insured deposits, uninsured deposits, bonds and all

other senior debt, will not be mandatory whether by conversion into

capital or by write-down of instruments before 1st January 2016.

(2) The Resolution Committee shall not exercise the write-

down or conversion powers in relation to the following liabilities

whether they are governed by the law of Malta, of another Member

State or of a third country

(a)

covered deposits

Provided that this paragraph shall not prevent the

Resolution Committee, where appropriate, from exercising

those powers in relation to any amount of a deposit that exceeds

the coverage level provided for in Article 6 of Directive 2014/

49/EU;

(b)

secured liabilities including covered bonds and

liabilities in the form of financial instruments used for hedging

purposes which form an integral part of the cover pool and

which according to Maltese law are secured in a way similar to

covered bonds;

(c)

any liability that arises by virtue of the holding by

the institution or entity referred to in paragraphs (b), (c) or (d) of

the definition "entity" in regulation 2(1) of client assets or client

money including client assets or client money held on behalf of

UCITS as defined in Article 1(2) of Directive 2009/65/EC or of

AIF’s as defined in point (a) of article 4(1) of Directive 2011/

61/EC, provided that such a client is protected under the

applicable insolvency law;

(d) any liability that arises by virtue of a fiduciary

relationship between the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) (as fiduciary) and another person (as beneficiary) provided

that such a beneficiary is protected under the applicable

insolvency or civil law;

(e)

liabilities to institutions, excluding entities that are

part of the same group, with an original maturity of less than

seven days;

(f)

liabilities with a remaining maturity of less than

seven days, owed to systems or operators of systems designated

according to Directive 98/26/EC or their participants and arising

from the participation in such a system;

(g)

a liability to any one of the following

(i) an employee, in relation to accrued salary,

pension benefits or other fixed remuneration, except for

the variable component of remuneration that is not

regulated by a collective bargaining agreement

Provided that this sub-paragraph shall not

apply to the variable component of the remuneration of

material risk takers as identified in Article 92(2) of the

CRD;

(ii) a commercial or trade creditor arising from

the provision to the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) of goods or services that are critical to the

daily functioning of its operations, including IT services,

utilities and the rental, servicing and upkeep of premises;

(iii) tax and social security authorities, provided

that those liabilities are preferred under the applicable law;

(iv) deposit guarantee schemes arising from

contributions due in accordance with Directive 2014/49/

EU

Provided that all secured assets relating to a covered bond

cover pool shall remain unaffected, segregated and with enough

funding. Neither that requirement, nor paragraph (b) shall prevent the

Resolution Committee, where appropriate, from exercising those

powers in relation to any part of a secured liability or a liability for

which collateral has been pledged that exceeds the value of the assets,

pledge, lien or collateral against which it is secured

Provided further that without prejudice to the large

exposure rules in the CRR and the CRD, in order to provide for the

resolvability of institutions and groups, the Resolution Committee

shall limit, in accordance with regulation 17(5)(b), the extent to

which other institutions hold liabilities eligible for a bail-in tool, save

for liabilities that are held at entities that are part of the same group.

(3) In exceptional circumstances, where the bail-in tool is

applied, the Resolution Committee may exclude or partially exclude

certain liabilities from the application of the write-down or

conversion powers where

(a)

it is not possible to bail-in that liability within a

reasonable time notwithstanding the good faith efforts of the

Resolution Committee;

(b) the exclusion is strictly necessary and is

proportionate to achieve the continuity of critical functions and

core business lines in a manner that maintains the ability of the

institution under resolution to continue key operations, services

and transactions;

(c)

the exclusion is strictly necessary and proportionate

to avoid giving rise to widespread contagion, in particular as

regards eligible deposits held by natural persons and micro,

small and medium sized enterprises, which would severely

disrupt the functioning of financial markets, including of

financial market infrastructures, in a manner that could cause a

serious disturbance to the economy of Malta, of another

Member State or of the European Union; or

(d) the application of the bail-in tool to those liabilities

would cause a destruction in value such that the losses borne by

other creditors would be higher than if those liabilities were

excluded from bail-in

Provided that, where a Resolution Committee decides to

exclude or partially exclude an eligible liability or class of eligible

liabilities under this sub-regulation, the level of write down or

conversion applied to other eligible liabilities may be increased to

take account of such exclusions, provided that the level of write down

and conversion applied to other eligible liabilities complies with the

principle in regulation 34(1)(g).

(4) Where the Resolution Committee decides to exclude or

partially exclude an eligible liability or class of eligible liabilities

pursuant to this regulation, and the losses that would have been borne

by those liabilities have not been passed on fully to other creditors,

the resolution financing arrangement may make a contribution to the

institution under resolution to do one or both of the following

(a)

cover any losses which have not been absorbed by

eligible liabilities and restore the net asset value of the

institution under resolution to zero in accordance with

regulation 46(1)(a);

(b) purchase shares or other instruments of ownership

or capital instruments in the institution under resolution, in

order to recapitalise the institution in accordance with

regulation 46(1)(b).

(5) The resolution financing arrangement may make a

contribution referred to in sub-regulation (4) only where

(a)

a contribution to loss absorption and recapitalisation

equal to an amount not less than 8% of the total liabilities

including own funds of the institution under resolution,

measured at the time of resolution action in accordance with the

valuation provided for in regulation 36, has been made by the

shareholders and the holders of other instruments of ownership,

the holders of relevant capital instruments and other eligible

liabilities through write down, conversion or otherwise; and

(b) the contribution of the resolution financing

arrangement does not exceed 5% of the total liabilities including

own funds of the institution under resolution, measured at the

time of resolution action in accordance with the valuation

provided for in regulation 36.

(6) The contribution of the resolution financing arrangement

referred to in sub-regulation (4) may be financed by

(a)

the amount available to the resolution financing

arrangement which has been raised through contributions by

institutions and Union branches in accordance with regulation

100(6) and regulation 103;

(b) the amount that can be raised through ex-post

contributions in accordance with regulation 104 within three

years; and

(c)

where the amounts referred to in paragraphs (a) and

(b) are insufficient, amounts raised from alternative financing

sources in accordance with regulation 105.

(7) In extraordinary circumstances, the Resolution Committee

may seek further funding from alternative financing sources after

(a)

the 5% limit specified in sub-regulation (5)(b) has

been reached; and

(b) all unsecured, non-preferred liabilities, other than

eligible deposits, have been written down or converted in full

Provided that, where the conditions laid down in this sub-

regulation are met, the resolution financing arrangement may make a

contribution from resources which have been raised through ex-ante

contributions in accordance with regulation 100(6) and regulation 103

and which have not yet been used.

(8) By way of derogation from sub-regulation (5)(a), the

resolution financing arrangement may also make a contribution as

referred to in sub-regulation (4) provided that

(a)

the contribution to loss absorption and

recapitalisation referred to in sub-regulation (5)(a) is equal to an

amount not less than 20% of the risk weighted assets of the

institution concerned;

(b) the resolution financing arrangement has at its

disposal, by way of ex-ante contributions (not including

contributions to a deposit guarantee scheme) raised in

accordance with regulation 100(6) and regulation 103, an

amount which is at least equal to 3% of covered deposits of all

the credit institutions authorised in Malta; and

(c)

the institution concerned has assets below EUR 900

billion on a consolidated basis.

(9) When exercising the discretions under sub-regulation (3),

the Resolution Committee shall give due consideration to

(a)

the principle that losses should be borne first by

shareholders and next, in general, by creditors of the institution

under resolution in order of preference;

(b) the level of loss absorbing capacity that would

remain in the institution under resolution if the liability or class

of liabilities were excluded; and

(c)

the need to maintain adequate resources for

resolution financing.

(10) Exclusions under sub-regulation (3) may be applied either

to completely exclude a liability from write down or to limit the

extent of the write down applied to that liability.

(11) Before exercising the discretion to exclude a liability under

sub-regulation (3), the Resolution Committee shall notify the

European Commission.

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Reg. 45 — Recovery and Resolution Regulations, 2015 Open official source

(1) Institutions shall, at all times, meet a minimum Application of

requirement for own funds and eligible liabilities. The minimum the

requirement.

requirement shall be calculated as the amount of own funds and

eligible liabilities expressed as a percentage of the total liabilities and

own funds of the institution

Provided that, for the purpose of this sub-regulation,

derivative liabilities shall be included in the total liabilities on the

basis that full recognition is given to counterparty netting rights.

(2) Notwithstanding sub-regulation (1), the Resolution

Committee shall exempt mortgage credit institutions financed by

covered bonds which, according to Maltese law are not allowed to

receive deposits from the obligation to meet, at all times, a minimum

requirement for own funds and eligible liabilities, as

(a)

those institutions will be wound-up through Maltese

insolvency procedures, or other types of procedure implemented

in accordance with regulations 38, 40 and 42, provided for those

institutions; and

(b) such Maltese insolvency procedures, or other types

of procedure, will ensure that creditors of those institutions,

including holders of covered bonds, where relevant, will bear

losses in a way that meets the resolution objectives.

(3) Eligible liabilities shall be included in the amount of own

funds and eligible liabilities referred to in sub-regulation (1) only if

they satisfy the following conditions

(a)

the instrument is issued and fully paid up;

(b) the liability is not owed to, secured by or guaranteed

by the institution itself;

(c)

the purchase of the instrument was not funded

directly or indirectly by the institution;

(d)

the liability has a remaining maturity of at least one

year

Provided that where a liability confers upon its

owner a right to early reimbursement, the maturity of that

liability shall be the first date where such a right arises;

(e)

the liability does not arise from a derivative;

(f)

the liability does not arise from a deposit which

benefits from preference in the national insolvency hierarchy in

accordance with Article 108 of the BRRD.

(4) Where a liability is governed by the law of a third-country,

the Resolution Committee may require the institution to demonstrate

that any decision of the Resolution Committee to write down or

convert that liability would be effective under the law of that third

country, having regard to the terms of the contract governing the

liability, international agreements on the recognition of resolution

proceedings and other relevant matters. If the Resolution Committee

is not satisfied that any decision would be effective under the law of

that third country, the liability shall not be counted towards the

minimum requirement for own funds and eligible liabilities.

(5) The minimum requirement for own funds and eligible

liabilities of each institution pursuant to sub-regulation (1) shall be

determined by the Resolution Committee, after consulting the

Authority, at least on the basis of the following criteria

(a)

the need to ensure that the institution can be

resolved by the application of the resolution tools including,

where appropriate, the bail-in tool, in a way that meets the

resolution objectives;

(b) the need to ensure, in appropriate cases, that the

institution has sufficient eligible liabilities to ensure that, if the

bail-in tool were to be applied, losses could be absorbed and the

Common Equity Tier 1 ratio of the institution could be restored

to a level necessary to enable it to continue to comply with the

conditions for obtaining a licence and to continue to carry out

the activities for which it is licensed under the Banking Act or Cap. 371.

the Investment Services Act and to sustain sufficient market Cap. 370.

confidence in the institution or entity;

(c)

the need to ensure that, if the resolution plan

anticipates that certain classes of eligible liabilities might be

excluded from bail-in under regulation 44(3) or that certain

classes of eligible liabilities might be transferred to a recipient

in full under a partial transfer, that the institution has sufficient

other eligible liabilities to ensure that losses could be absorbed

and the Common Equity Tier 1 ratio of the institution could be

restored to a level necessary to enable it to continue to comply

with the conditions for obtaining a licence and to continue to

carry out the activities for which it is licensed under the

Banking Act or the Investment Services Act;

(d) the size, the business model, the funding model and

the risk profile of the institution;

(e)

the extent to which the Deposit Guarantee Scheme

could contribute to the financing of resolution in accordance

with regulation 109;

(f)

the extent to which the failure of the institution

would have adverse effects on financial stability, including, due

to its interconnectedness with other institutions or with the rest

of the financial system through contagion to other institutions.

(6) The Resolution Committee may provide for additional

criteria on the basis of which the minimum requirement for own funds

and eligible liabilities shall be determined.

(7) Institutions shall comply with the minimum requirements

laid down in this regulation on an individual basis

Provided that the Resolution Committee may, after

consulting the Authority, decide to apply the minimum requirement

laid down in this regulation also to an entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1).

(8) In addition to sub-regulation (7), Union parent

undertakings shall comply with the minimum requirements laid down

in this regulation on a consolidated basis

Provided that where the Resolution Committee is the

group-level resolution authority, such minimum requirements shall be

determined by Resolution Committee, after consulting the

consolidating supervisor, in accordance with sub-regulation (9) to

(11), at least on the basis of the criteria laid down in sub-regulation

(5) and of whether the third-country subsidiaries of the group are to

be resolved separately according to the resolution plan.

(9) The Resolution Committee shall do everything within its

power to reach a joint decision -

(a)

where the Resolution Committee is the group-level

resolution authority, together with the European resolution

authorities responsible for the subsidiaries on an individual

basis; or

(b) where the Resolution Committee is the resolution

authority responsible for a subsidiary on an individual basis,

together with the European resolution authority acting as the

group-level resolution authority and the European resolution

authorities responsible for the other subsidiaries, if any,

on the level of the minimum requirement applied at the consolidated

level. The joint decision shall be binding on the Resolution

Committee and on the European resolution authorities concerned

Provided that the joint decision shall be fully reasoned and

where the Resolution Committee is the group-level resolution

authority, the Resolution Committee shall provide the decision to the

Union parent undertaking

Provided further that the joint decision shall be reviewed

and where relevant updated on a regular basis.

(10) Where the Resolution Committee is the group-level

resolution authority, in the absence of a joint decision in accordance

with sub-regulation (9) within four months, a decision shall be taken

on the consolidated minimum requirement by the Resolution

Committee in its capacity as the group-level resolution authority after

duly taking into consideration the assessment of subsidiaries

performed by the relevant European resolution authorities. If, at the

end of the four-month period, any of the authorities mentioned in sub-

regulation (9) has referred the matter to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee, in its capacity as the group-level resolution authority,

shall defer its decision and await any decision that the EBA may take

in accordance with Article 19(3) of that Regulation, and shall take its

decision in accordance with the decision of the EBA. The four-month

period shall be deemed to be the conciliation period within the

meaning of that Regulation. The matter shall not be referred to the

EBA after the end of the four-month period or after a joint decision

has been reached. In the absence of an EBA decision within one

month, the decision of the Resolution Committee in its capacity as the

group-level resolution authority shall apply

Provided that, the decision taken by the Resolution

Committee in its capacity as the group-level resolution authority in

the absence of a joint decision, shall be binding on the European

resolution authorities concerned

Provided further that any decision taken in the absence of a

joint decision shall be reviewed and where relevant updated on a

regular basis.

(11) The Resolution Committee may, within the four-month

period referred to in sub-regulation (10), refer the matter to the EBA

in accordance with Article 19 of Regulation (EU) No 1093/2010. The

four-month period shall be deemed to be the conciliation period

within the meaning of that Regulation. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision has been reached. In the absence of an EBA decision

within one month, where the Resolution Committee is the group-level

resolution authority, the decision of the Resolution Committee shall

apply, and where the Resolution Committee is responsible for a

subsidiary on an individual basis, the decision of the European

resolution authority acting as the group-level resolution authority

shall apply and shall be binding on the Resolution Committee.

(12) The Resolution Committee shall set the minimum

requirement to be applied to the group’s subsidiaries on an individual

basis. Those minimum requirements shall be set at a level appropriate

for the subsidiary having regard to

(a)

the criteria listed in sub-regulation (5), in particular

the size, business model and risk profile of the subsidiary,

including its own funds; and

(b) the consolidated requirement that has been set for

the group under sub-regulation (9) to (11).

(13) The Resolution Committee shall do everything within its

power to reach a joint decision -

(a)

where the Resolution Committee is the group-level

resolution authority, together with the European resolution

authorities responsible for the subsidiaries on an individual

basis; or

(b) where the Resolution Committee is responsible for a

subsidiary on an individual basis, together with the European

resolution authority acting as the group-level resolution

authority and the European resolution authorities responsible

for the other subsidiaries on an individual level, if any,

on the level of the minimum requirement to be applied to each

respective subsidiary at an individual level. The joint decision shall

be binding on the Resolution Committee and the European resolution

authorities concerned

Provided that the joint decision shall be fully reasoned and

shall be provided by the Resolution Committee to, where the

Resolution Committee is responsible for a subsidiary, the subsidiary,

or where the Resolution Committee is the group-level resolution

authority, to the Union parent institution

Provided further that the joint decision shall be reviewed

and where relevant updated on a regular basis.

(14) Where the Resolution Committee is responsible for a

subsidiary on an individual basis, in the absence of a joint decision in

accordance with sub-regulation (13) within a period of four months,

the decision on the level of the minimum requirement to be applied to

the subsidiary concerned shall be taken by the Resolution Committee,

duly considering the views and reservations expressed by the

European resolution authority acting as the group-level resolution

authority

Provided that if, at the end of the four-month period, the

European resolution authority acting as the group-level resolution

authority has referred the matter to the EBA in accordance with

Article 19 of Regulation (EU) No 1093/2010, the Resolution

Committee shall defer its decision and await any decision that the

EBA may take in accordance with Article 19(3) of that Regulation,

and shall take its decision in accordance with the decision of the

EBA. The four-month period shall be deemed to be the conciliation

period within the meaning of that Regulation. The matter shall not be

referred to the EBA after the end of the four-month period or after a

joint decision referred to in sub-regulation (13) has been reached. In

the absence of an EBA decision within one month, the decision of the

Resolution Committee, in its capacity as the resolution authority of

the subsidiary on an individual basis, shall apply to the subsidiary for

which the Resolution Committee is responsible and shall be binding

on the Resolution Committee, and the decisions of the European

resolution authorities of the other subsidiaries, if any, shall apply to

the subsidiaries concerned and shall be binding on the European

resolution authorities concerned

Provided further that the decision taken by the Resolution

Committee shall be reviewed and where relevant updated on a regular

basis.

(15) Where the Resolution Committee is the group-level

resolution authority, the Resolution Committee may, within four

months, refer the matter to the EBA in accordance with Article 19 of

Regulation (EU) No 1093/2010. The four-month period shall be

deemed to be the conciliation period within the meaning of that

Regulation. The matter shall not be referred to the EBA after the end

of the four-month period or after a joint decision referred to in sub-

regulation (13) has been reached. The Resolution Committee in its

capacity as the group-level resolution authority shall not refer the

matter to the EBA for binding mediation where the level set by

European resolution authorities of subsidiaries is within one

percentage point of the consolidated level set under sub-regulations

(9) to (11). In the absence of an EBA decision within one month, the

decision of the European resolution authorities responsible for

subsidiaries shall apply and shall be binding on the Resolution

Committee.

(16) Where the Resolution Committee is the group-level

resolution authority, the Resolution Committee may fully waive the

application of the individual minimum requirement to a Union parent

institution where

(a)

the Union parent institution complies on a

consolidated basis with the minimum requirement set under

sub-regulation (8); and

(b) the Authority has fully waived the application of

individual capital requirements to the institution in accordance

with Article 7(3) of the CRR.

(17) Where the Resolution Committee is responsible for a

subsidiary, the Resolution Committee may fully waive the application

of sub-regulation (7) to that subsidiary where

(a)

both the subsidiary and its parent undertaking are

subject to licensing conditions and supervision in Malta;

(b) the subsidiary is included in the supervision on a

consolidated basis of the institution which is the parent

undertaking;

(c)

the highest level group institution in Malta, where

different to the Union parent institution, complies on a sub-

consolidated basis with the minimum requirement set under

sub-regulation (7);

(d) there is no current or foreseen material practical or

legal impediment to the prompt transfer of own funds or

repayment of liabilities to the subsidiary by its parent

undertaking;

(e)

either the parent undertaking satisfies the Authority

regarding the prudent management of the subsidiary and has

declared, with the consent of the Authority, that it guarantees

the commitments entered into by the subsidiary, or the risks in

the subsidiary are of no significance;

(f)

the risk evaluation, measurement and control

procedures of the parent undertaking cover the subsidiary;

(g) the parent undertaking holds more than 50% of the

voting rights attached to shares in the capital of the subsidiary

or has the right to appoint or remove a majority of the members

of the board of directors of the subsidiary; and

(h) the Authority has fully waived the application of

individual capital requirements to the subsidiary under Article

7(1) of the CRR.

(18) The decisions taken in accordance with this regulation may

provide that the minimum requirement for own funds and eligible

liabilities is partially met at consolidated or individual level through

contractual bail-in instruments.

(19) To qualify as a contractual bail-in instrument under sub-

regulation (18), the Resolution Committee shall be satisfied that the

instrument

(a)

contains a contractual term providing that, where the

Resolution Committee decides to apply the bail-in tool to that

institution, the instrument shall be written down or converted to

the extent required before other eligible liabilities are written

down or converted; and

(b)

is subject to a binding subordination agreement,

undertaking or provision under which in the event of normal

insolvency proceedings, it ranks below other eligible liabilities

and cannot be repaid until other eligible liabilities outstanding at

the time have been settled.

(20) The Resolution Committee, in coordination with the

Authority, shall require and verify that institutions meet the minimum

requirement for own funds and eligible liabilities laid down in sub-

regulation (1) and where relevant the requirement laid down in sub-

regulation (18), and shall take any decision pursuant to this regulation

in parallel with the development and the maintenance of resolution

plans.

(21) The Resolution Committee, in coordination with the

Authority, shall inform the EBA of the minimum requirement for own

funds and eligible liabilities, and where relevant the requirement laid

down in sub-regulation (18), that have been set for each institution

under their jurisdiction.

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Reg. 46 — Recovery and Resolution Regulations, 2015 Open official source

(1) When applying the bail-in tool, the Resolution Assessment of

Committee shall assess, on the basis of a valuation that complies with amount

in.

regulation 36, the aggregate of

(a)

where relevant, the amount by which eligible

liabilities must be written down in order to ensure that the net

asset value of the institution under resolution is equal to zero;

and

(b) where relevant, the amount by which eligible

liabilities must be converted into shares or other types of capital

instruments in order to restore the Common Equity Tier 1

capital ratio of either

(i)

the institution under resolution; or

(ii) the bridge institution.

(2) The assessment referred to in sub-regulation (1) shall

establish the amount by which eligible liabilities need to be written

down or converted in order to restore the Common Equity Tier 1

capital ratio of the institution under resolution or where applicable

establish the ratio of the bridge institution taking into account any

contribution of capital by the resolution financing arrangement

pursuant to regulation 101(1)(d), and to sustain sufficient market

confidence in the institution under resolution or the bridge institution

and enable it to continue to meet, for at least one year, the licence

conditions and to continue to carry out the activities for which it is

authorised under the CRD or Directive 2014/65/EU

Provided that, where the Resolution Committee intends to

use the asset separation tool referred to in regulation 42, the amount

by which eligible liabilities need to be reduced shall take into account

a prudent estimate of the capital needs of the asset management

vehicle as appropriate.

(3) Where capital has been written down in accordance with

regulations 59 to 62 and bail-in has been applied pursuant to

regulation 43(2) and the level of write-down based on the preliminary

valuation according to regulation 36 is found to exceed requirements

when assessed against the definitive valuation according to regulation

36(10), a write-up mechanism may be applied to reimburse creditors

and then shareholders to the extent necessary.

(4) The Resolution Committee shall establish and maintain

arrangements to ensure that the assessment and valuation is based on

information about the assets and liabilities of the institution under

resolution that is as up to date and as comprehensive as is reasonably

possible.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 47 Treatment of shareholders in bail-in or write- down or conversion of capital instruments. — Recovery and Resolution Regulations, 2015 Open official source

(1) When applying the bail-in tool in regulation 43(2) or

the write-down or conversion of capital instruments in regulation 59,

the Resolution Committee shall, in respect of shareholders and

holders of other instruments of ownership, take one or both of the

following actions

(a)

cancel existing shares or other instruments of

ownership or transfer them to bailed-in creditors;

(b) provided that, in accordance to the valuation carried

out under regulation 36, the institution under resolution has a

positive net value, dilute existing shareholders and holders of

other instruments of ownership as a result of the conversion into

shares or other instruments of ownership of

(i) relevant capital instruments issued by the

institution pursuant to the power referred to in regulation

59(2); or

(ii) eligible liabilities issued by the institution

under resolution pursuant to the power referred to in

regulation 63(1)(f)

Provided that with regard to paragraph (b), the conversion

shall be conducted at a rate of conversion that severely dilutes

existing holdings of shares or other instruments of ownership.

(2) The actions referred to in sub-regulation (1) shall also be

taken in respect of shareholders and holders of other instruments of

ownership where the shares or other instruments of ownership in

question were issued or conferred in the following circumstances

(a)

pursuant to conversion of debt instruments to shares

or other instruments of ownership in accordance with

contractual terms of the original debt instruments on the

occurrence of an event that preceded or occurred at the same

time as the assessment by the Resolution Committee that the

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) met the conditions for

resolution;

(b) pursuant to the conversion of relevant capital

instruments to Common Equity Tier 1 instruments pursuant to

regulation 60.

(3) When considering which action to take in accordance with

sub-regulation (1), the Resolution Committee shall have regard to

(a)

the valuation carried out in accordance with

regulation 36;

(b) the amount by which the Resolution Committee has

assessed that Common Equity Tier 1 items must be reduced and

relevant capital instruments must be written down or converted

pursuant to regulation 60(1); and

(c)

the aggregate amount assessed by the Resolution

Committee pursuant to regulation 46.

(4) By way of derogation from Articles 22 to 25 of the CRD,

the requirement to give a notice in Article 26 of the CRD, articles 10,

10A and 10B of the Investment Services Act and the Investment Cap. 370.

Services Rules for Investment Services Providers, where the

application of the bail-in tool or the conversion of capital instruments

would result in the acquisition of or increase in a qualifying holding

in an institution as referred to in article 13(1) of the Banking Act or Cap. 371.

article 10 of the Investment Services Act, the Authority shall carry

out the assessment required under those Articles (and those articles)

in a timely manner that does not delay the application of the bail-in

tool or the conversion of capital instruments, or prevent resolution

action from achieving the relevant resolution objectives.

(5) If the Authority has not completed the assessment required

under sub-regulation (4) on the date of application of the bail-in tool

or the conversion of capital instruments, regulation 38(9) shall apply

to any acquisition of or increase in a qualifying holding by an

acquirer resulting from the application of the bail-in tool or the

conversion of capital instruments.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 48 Sequence of write-down and conversion. — Recovery and Resolution Regulations, 2015 Open official source

(1) When applying the bail-in tool, the Resolution

Committee shall exercise the write-down and conversion powers,

subject to any exclusions under regulation 44(2) and (3), meeting the

following requirements

(a)

Common Equity Tier 1 items are reduced in

accordance with regulation 60(1)(a);

(b) if, and only if, the total reduction pursuant to

paragraph (a) is less than the sum of the amounts referred to in

regulation 47(3)(b) and (c), the Resolution Committee reduces

the principal amount of Additional Tier 1 instruments to the

extent required and to the extent of their capacity;

(c)

if, and only if, the total reduction pursuant to

paragraphs (a) and (b) is less than the sum of the amounts

referred to in regulation 47(3)(b) and (c), the Resolution

Committee reduces the principal amount of Tier 2 instruments

to the extent required and to the extent of their capacity;

(d) if, and only if, the total reduction of shares or other

instruments of ownership and relevant capital instruments

pursuant to paragraphs (a), (b) and (c) is less than the sum of the

amounts referred to in regulation 47(3)(b) and (c), the

Resolution Committee reduces to the extent required the

principal amount of subordinated debt that is not Additional

Tier 1 or Tier 2 capital in accordance with the ranking of claims

in normal insolvency proceedings, in conjunction with the write

down pursuant to paragraphs (a), (b) and (c) to produce the sum

of the amounts referred to in regulation 47(3)(b) and (c);

(e)

if, and only if, the total reduction of shares or other

instruments of ownership, relevant capital instruments and

eligible liabilities pursuant to paragraphs (a) to (d) is less than

the sum of the amounts referred to in regulation 47(3)(b) and

(c), the Resolution Committee reduces to the extent required the

principal amount of, or outstanding amount payable in respect

of, the rest of eligible liabilities in accordance with the ranking

of claims in normal insolvency proceedings, including the

ranking of deposits provided for in regulation 108, pursuant to

regulation 44, in conjunction with the write-down pursuant to

paragraphs (a), (b), (c) and (d) to produce the sum of the

amounts referred to in regulation 47(3)(b) and (c).

(2) When applying the write down or conversion powers, the

Resolution Committee shall allocate the losses represented by the

sum of the amounts referred to in regulation 47(3)(b) and (c) equally

between shares or other instruments of ownership and eligible

liabilities of the same rank by reducing the principal amount of, or

outstanding amount payable in respect of, those shares or other

instruments of ownership and eligible liabilities to the same extent

pro rata to their value except where a different allocation of losses

amongst liabilities of the same rank is allowed in the circumstances

specified in regulation 44(3)

Provided that this shall not prevent liabilities which have

been excluded from bail-in in accordance with regulation 44(2) and

(3) from receiving more favourable treatment than eligible liabilities

which are of the same rank in normal insolvency proceedings.

(3) Before applying the write-down or conversion referred to

in sub-regulation (1)(e), the Resolution Committee shall convert or

reduce the principal amount on instruments referred to in sub-

regulation (1)(b), (c) and (d) when those instruments contain the

following terms and have not already been converted

(a)

terms that provide for the principal amount of the

instrument to be reduced on the occurrence of any event that

refers to the financial situation, solvency or levels of own funds

of the institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1);

(b) terms that provide for the conversion of the

instruments to shares or other instruments of ownership on the

occurrence of any such event.

(4) Where the principal amount of an instrument has been

reduced, but not to zero, in accordance with terms of the kind referred

to in sub-regulation (3)(a) before the application of the bail-in

pursuant to sub-regulation (1), the Resolution Committee shall apply

the write-down and conversion powers to the residual amount of that

principal in accordance with sub-regulation (1).

(5) When deciding on whether liabilities are to be written

down or converted into equity, the Resolution Committee shall not

convert one class of liabilities, while a class of liabilities that is

subordinated to that class remains substantially unconverted into

equity or not written down, unless otherwise permitted under

regulation 44(2) and (3).

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Reg. 49 — Recovery and Resolution Regulations, 2015 Open official source

(1)

The Resolution Committee shall comply with this Derivatives.

regulation when applying the write-down and conversion powers to

liabilities arising from derivatives.

(2) The Resolution Committee shall exercise the write-down

and conversion powers in relation to a liability arising from a

derivative only upon or after closing-out the derivatives. Upon entry

into resolution, the Resolution Committee shall be empowered to

terminate and close out any derivative contract for that purpose.

(3) Where a derivative liability has been excluded from the

application of the bail-in tool under regulation 44(3), the Resolution

Committee shall not be obliged to terminate or close out the

derivative contract.

(4) Where derivative transactions are subject to a netting

agreement, the Resolution Committee or an independent valuer shall

determine as part of the valuation under regulation 36 the liability

arising from those transactions on a net basis in accordance with the

terms of the agreement.

(5) The Resolution Committee shall determine the value of

liabilities arising from derivatives in accordance with the following

(a)

appropriate methodologies for determining the value

of classes of derivatives, including transactions that are subject

to netting agreements;

(b) principles for establishing the relevant point in time

at which the value of a derivative position should be

established; and

(c)

appropriate methodologies for comparing the

destruction in value that would arise from the close out and bail-

in of derivatives with the amount of losses that would be borne

by derivatives in a bail-in.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 50 Rate of conversion of debt to equity. — Recovery and Resolution Regulations, 2015 Open official source

(1) When the Resolution Committee exercises the

powers specified in regulation 59(3) and regulation 63(1)(f), they

may apply a different conversion rate to different classes of capital

instruments and liabilities in accordance with one or both of the

principles referred to in sub-regulations (2) and (3).

(2) The conversion rate shall represent appropriate

compensation to the affected creditor for any loss incurred by virtue

of the exercise of the write down and conversion powers.

(3) When different conversion rates are applied according to

sub-regulation (1), the conversion rate applicable to liabilities that are

considered to be senior under applicable insolvency law shall be

higher than the conversion rate applicable to subordinated liabilities.

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Reg. 51 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee applies the bail-in Recovery and

tool to recapitalise an institution or entity referred to in paragraphs reorganisation

measures to

(b), (c) or (d) of the definition "entity" in regulation 2(1) in accompany

in.

accordance with regulation 43(2)(a), arrangements shall be adopted to

ensure that a business reorganisation plan for that institution or entity

is drawn up and implemented in accordance with regulation 52.

(2) The arrangements referred to in sub-regulation (1) may

include the appointment by the Resolution Committee of a person or

persons appointed in accordance with regulation 72(1) with the

objective of drawing up and implementing the business

reorganisation plan required by regulation 52.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 52 — Recovery and Resolution Regulations, 2015 Open official source

(1) Within one month after the application of the bail-in Business

tool to an institution or entity referred to in paragraphs (b), (c) or (d) reorganisation

plan.

of the definition "entity" in regulation 2(1) in accordance with

regulation 43(2)(a), the board of directors or the person or persons

appointed in accordance with regulation 72(1) shall draw up and

submit to the Resolution Committee, a business reorganisation plan

that satisfies the requirements of sub-regulations (4) and (5). Where

the Union State aid framework is applicable, the Resolution

Committee shall ensure that such a plan is compatible with the

restructuring plan that the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

is required to submit to the European Commission under that

framework.

(2) Where the Resolution Committee is the group-level

resolution authority, and the bail-in tool in regulation 43(2)(a) is

applied to two or more group entities, the business reorganisation

plan shall be prepared by the Union parent institution and cover all of

the institutions in the group in accordance with the procedure

specified in regulations 7 and 8 and shall be submitted to the

Resolution Committee. The Resolution Committee, in its capacity as

the group-level resolution authority, shall communicate the plan to

the European resolution authorities concerned and to the EBA.

(3) In exceptional circumstances, and if it is necessary for

achieving the resolution objectives, the Resolution Committee may

extend the period in sub-regulation (1) up to a maximum of two

months from the application of the bail-in tool

Provided that, where the business reorganisation plan is

required to be notified within the Union State aid framework, the

Resolution Committee may extend the period in sub-regulation (1) up

to a maximum of two months since the application of the bail-in tool

or until the deadline laid down by the Union State aid framework,

whichever occurs earlier.

(4) A business reorganisation plan shall set out measures

aiming to restore the long-term viability of the institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) or parts of its business within a reasonable time-scale.

Those measures shall be based on realistic assumptions as to the

economic and financial market conditions under which the institution

or entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) will operate

Provided that the business reorganisation plan shall take

account, inter alia, of the current state and future prospects of the

financial markets, reflecting best-case and worst-case assumptions,

including a combination of events allowing the identification of the

institution’s main vulnerabilities. Assumptions shall be compared

with appropriate sector-wide benchmarks.

(5) A business reorganisation plan shall include at least the

following elements

(a)

a detailed diagnosis of the factors and problems that

caused the institution or entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) to fail or to be

likely to fail, and the circumstances that led to its difficulties;

(b) a description of the measures aiming to restore the

long-term viability of the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) that are to be adopted;

(c)

a timetable for the implementation of those

measures.

(6) Measures aiming to restore the long-term viability of an

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) may include

(a)

the reorganisation of the activities of the institution

or entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1);

(b) changes to the operational

systems

and

infrastructure within the institution;

(c)

the withdrawal from loss-making activities;

(d) the restructuring of existing activities that can be

made competitive;

(e)

the sale of assets or of business lines.

(7) Within one month of the date of submission of the business

reorganisation plan, the Resolution Committee shall assess the

likelihood that the plan, if implemented, will restore the long-term

viability of the institution or entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1). The assessment shall

be completed in agreement with the Authority. If the Resolution

Committee and the Authority are satisfied that the plan would achieve

that objective, the Resolution Committee shall approve the plan.

(8) If the Resolution Committee is not satisfied that the plan

would achieve the objective referred to in sub-regulation (7), the

Resolution Committee, in agreement with the Authority, shall notify

the board of directors or the person or persons appointed in

accordance with regulation 72(1) of its concerns and require the

amendment of the plan in a way that addresses those concerns.

(9) Within two weeks from the date of receipt of the

notification referred to in sub-regulation (8), the board of directors or

the person or persons appointed in accordance with regulation 72(1)

shall submit an amended plan to the Resolution Committee for

approval. The Resolution Committee shall assess the amended plan,

and shall notify the board of directors or the person or persons

appointed in accordance with regulation 72(1) within one week

whether it is satisfied that the plan, as amended, addresses the

concerns notified or whether further amendment is required.

(10) The board of directors or the person or persons appointed

in accordance with regulation 72(1) shall implement the

reorganisation plan as agreed by the Resolution Committee and

Authority, and shall submit a report to the Resolution Committee at

least every six months on progress in the implementation of the plan.

(11) The board of directors or the person or persons appointed

in accordance with regulation 72(1) shall revise the plan if, in the

opinion of the Resolution Committee with the agreement of the

Authority, it is necessary to achieve the aim referred to in sub-

regulation (4), and shall submit any such revision to the Resolution

Committee for approval.

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Reg. 53 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where a Resolution Committee exercises a power Effect of bail-in.

referred to in regulation 59(2) and in regulation 63(1)(e) to (i), the

reduction of principal or outstanding amount due, conversion or

cancellation takes effect and is immediately binding on the institution

under resolution and affected creditors and shareholders.

(2) The Resolution Committee shall have the power to

complete or require the completion of all the administrative and

procedural tasks necessary to give effect to the exercise of a power

referred to in regulation 59(2) and in regulation 63(1)(e) to (i),

including

(a)

the amendment of all relevant registers;

(b) the delisting or removal from trading of shares or

other instruments of ownership or debt instruments;

(c)

the listing or admission to trading of new shares or

other instruments of ownership;

(d) the relisting or readmission of any debt instruments

which have been written down, without the requirement for the

issuing of a prospectus pursuant to Directive 2003/71/EC of the

European Parliament and of the Council of 4 November 2003 on

the prospectus to be published when securities are offered to the

public or admitted to trading and amending Directive 2001/34/

EC, as amended from time to time, including any implementing

measures that have been or may be issued thereunder.

(3) Where the Resolution Committee reduces to zero the

principal amount of, or outstanding amount payable in respect of, a

liability by means of the power referred to in regulation 63(1)(e), that

liability and any obligations or claims arising in relation to it that are

not accrued at the time when the power is exercised shall be treated as

discharged for all purposes, and shall not be provable in any

subsequent proceedings in relation to the institution under resolution

or any successor entity in any subsequent winding up.

(4) Where the Resolution Committee reduces in part, but not

in full, the principal amount of, or outstanding amount payable in

respect of, a liability by means of the power referred to in regulation

63(1)(e)

(a)

the liability shall be discharged to the extent of the

amount reduced;

(b) the relevant instrument or agreement that created the

original liability shall continue to apply in relation to the

residual principal amount of, or outstanding amount payable in

respect of the liability, subject to any modification of the

amount of interest payable to reflect the reduction of the

principal amount, and any further modification of the terms that

the Resolution Committee might make by means of the power

referred to in regulation 63(1)(j).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 54 — Recovery and Resolution Regulations, 2015 Open official source

(1) Without prejudice to regulation 63(1)(i), institutions Removal of

and entities referred to in paragraphs (b), (c) or (d) of the definition procedural

impediments to

"entity" in regulation 2(1) shall, where applicable, be required to bail-in.

maintain at all times a sufficient amount of authorised share capital or

of other Common Equity Tier 1 instruments, so that, in the event that

the Resolution Committee exercises the powers referred to in

regulation 63(1)(e) and (f) in relation to an institution or an entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) or any of its subsidiaries, the institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) is not prevented from issuing sufficient new shares or

other instruments of ownership to ensure that the conversion of

liabilities into shares or other instruments of ownership could be

carried out effectively.

(2) The Resolution Committee shall assess whether it is

appropriate to impose the requirement laid down in sub-regulation (1)

in the case of a particular institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

in the context of the development and maintenance of the resolution

plan for that institution or group, having regard, in particular, to the

resolution actions contemplated in that plan. If the resolution plan

provides for the possible application of the bail-in tool, the

Resolution Committee shall verify that the authorised share capital or

other Common Equity Tier 1 instruments is sufficient to cover the

sum of the amounts referred to in regulation 47(3)(b) and (c).

(3) Notwithstanding anything contained in any other law, there

shall be no procedural impediments to the conversion of liabilities to

shares or other instruments of ownership existing by virtue of their

instruments of incorporation or statutes, including pre-emption rights

for shareholders or requirements for the consent of shareholders to an

increase in capital.

(4) This regulation is without prejudice to the amendments to

Directives 82/891/EEC, 2004/25/EC, 2005/56/EC, 2007/36/EC,

2011/35/EU and Directive 2012/30/EU set out in Title X of the

BRRD.

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Reg. 55 — Recovery and Resolution Regulations, 2015 Open official source

(1) Institutions and entities referred to in paragraphs (b), Contractual

(c) or (d) of the definition "entity" in regulation 2(1) shall include a recognition

bail-in.

contractual term by which the creditor or party to the agreement

creating the liability recognises that liability may be subject to the

write-down and conversion powers and agrees to be bound by any

reduction of the principal or outstanding amount due, conversion or

cancellation that is effected by the exercise of those powers by the

Resolution Committee, provided that such liability is

(a)

not excluded under regulation 44(2);

(b)

not a deposit referred to in regulation 108(a);

(c)

governed by the law of a third country; and

(d) issued or entered into on or after the date on which

these regulations are adopted

Provided that this sub-regulation shall not apply where the

Resolution Committee determines that the liabilities or instruments

referred to in this sub-regulation can be subject to write down and

conversion powers by the Resolution Committee or by an European

resolution authority pursuant to the law of the third country or to a

binding agreement concluded with that third country

Provided further that the Resolution Committee may

require institutions and entities referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1) to provide it with a legal

opinion relating to the legal enforceability and effectiveness of such a

term.

(2) If an institution or entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) fails to include, in

the contractual provisions governing a relevant liability, a term

required in accordance with sub-regulation (1), that failure shall not

prevent the Resolution Committee from exercising the write down

and conversion powers in relation to that liability.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 56 Government financial stabilisation tools. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Ministry responsible for Finance may provide

extraordinary public financial support through additional financial

stabilisation tools in accordance with sub-regulation (3), regulation

37(10) and with Union State aid framework, for the purpose of

participating in the resolution of an institution or an entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1), including by intervening directly in order to avoid its winding

up, with a view to meeting the objectives for resolution referred to in

regulation 31(2) in relation to Malta or the European Union as a

whole. Such an action shall be carried out under the leadership of the

Ministry responsible for Finance or the government in close

cooperation with the Resolution Committee.

(2) In order to give effect to the government financial

stabilisation tools, the Ministry responsible for Finance shall have the

relevant resolution powers specified in regulations 63 to 72, and shall

ensure that regulations 66, 68, 83 and 117 apply.

(3) The government financial stabilisation tools shall be used

as a last resort after having assessed and exploited the other resolution

tools to the maximum extent practicable whilst maintaining financial

stability, as determined by the Ministry responsible for Finance or the

government after consulting the Resolution Committee.

(4) When applying the government financial stabilisation

tools, the Ministry responsible for Finance and the Resolution

Committee shall apply the tools only if all the conditions laid down in

regulation 32(1) as well as one of the following conditions are met

(a)

the Ministry responsible for Finance and the

Resolution Committee, after consulting the Central bank and the

Authority, determine that the application of the resolution tools

would not suffice to avoid a significant adverse effect on the

financial system;

(b) the Ministry responsible for Finance and the

Resolution Committee determine that the application of the

resolution tools would not suffice to protect the public interest,

where extraordinary liquidity assistance from the Central bank

has previously been given to the institution;

(c)

in respect of the temporary public ownership tool,

the Ministry responsible for Finance, after consulting the

Authority and the Resolution Committee, determines that the

application of the resolution tools would not suffice to protect

the public interest, where public equity support through the

equity support tool has previously been given to the institution.

(5) The financial stabilisation tools shall consist of the

following

(a)

public equity support tool as referred to in regulation

57;

(b) temporary public ownership tool as referred to in

regulation 58.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 57 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Ministry responsible for Finance may, while Public equity

complying with Maltese company law, participate in the support tool.

recapitalisation of an institution or an entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) by providing

capital to the latter in exchange for the following instruments, subject

to the requirements of the CRR

(a)

Common Equity Tier 1 instruments;

(b)

Additional Tier 1 instruments or Tier 2 instruments.

(2) To the extent that the Government of Malta’s shareholding

in an institution or an entity referred to in paragraphs (b), (c) or (d) of

the definition "entity" in regulation 2(1) permits, such institutions or

entities subject to public equity support tools in accordance with this

regulation shall be managed on a commercial and professional basis.

(3) Where the Ministry responsible for Finance provides

public equity support tools in accordance with this regulation, it shall

ensure that its holding in the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

is transferred to the private sector as soon as commercial and

financial circumstances allow.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 58 Temporary public ownership tool. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Ministry responsible for Finance may take an

institution or an entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) into temporary public

ownership.

(2) For that purpose one or more share transfer orders may be

made in which the transferee is

(a)

a nominee of the Government of Malta; or

(b)

a company wholly owned by the Government of

Malta.

(3) Institutions or entities referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1) subject to the

temporary public ownership tool in accordance with this regulation

shall be managed on a commercial and professional basis and shall be

transferred to the private sector as soon as commercial and financial

circumstances allow.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 59 Requirement to write down or convert capital instruments. — Recovery and Resolution Regulations, 2015 Open official source

(1) The power to write down or convert relevant capital

instruments may be exercised either

(a)

independently of resolution action; or

(b) in combination with a resolution action, where the

conditions for resolution specified in regulations 32 and 33 are

met.

(2) The Resolution Committee shall have the power to write

down or convert relevant capital instruments into shares or other

instruments of ownership of institutions and entities referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1).

(3) The Resolution Committee shall exercise the write-down

or conversion power, in accordance with regulation 60 and without

delay, in relation to relevant capital instruments issued by an

institution or an entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) when one or more of the

following circumstances apply

(a)

where the determination has been made that

conditions for resolution specified in regulations 32 and 33 have

been met, before any resolution action is taken;

(b) the appropriate authority determines that unless that

power is exercised in relation to the relevant capital

instruments, the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) will no longer be viable;

(c)

in the case of relevant capital instruments issued by

a subsidiary and where those capital instruments are recognised

for the purposes of meeting own funds requirements on an

individual and on a consolidated basis, a joint determination

taking the form of a joint decision is made by -

(i) where the Authority is the consolidating

supervisor, the appropriate authority and the overseas

appropriate authority of the Member State of the

subsidiary; or

(ii) where the Authority is responsible for the

subsidiary, the appropriate authority, the appropriate

authority of the Member State of the consolidating

supervisor and the overseas appropriate authorities of the

Member State of the other subsidiaries, if any;

in accordance with regulation 92(4) and (5) that unless the write

down or conversion power is exercised in relation to those

instruments, the group will no longer be viable;

(d) in the case of relevant capital instruments issued at

the level of the parent undertaking and where those capital

instruments are recognised for the purposes of meeting own

funds requirements on an individual basis at the level of the

parent undertaking or on a consolidated basis, and: where the

Authority is the consolidating supervisor, the appropriate

authority; or, where the Authority is responsible for a

subsidiary, the overseas appropriate authority of the Member

State of the consolidating supervisor; makes a determination

that unless the write down or conversion power is exercised in

relation to those instruments, the group will no longer be viable;

(e)

extraordinary public financial support is required by

the institution or the entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1) except in any of

the circumstances set out in regulation 32(4)(d)(iii).

(4) For the purposes of sub-regulation (3), an institution or an

entity referred to in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1) or a group shall be deemed to be no longer viable

only if both of the following conditions are met

(a)

the institution or the entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) or the

group is failing or likely to fail;

(b) having regard to timing and other relevant

circumstances, there is no reasonable prospect that any action,

including alternative private sector measures or supervisory

action (including early intervention measures), other than the

write down or conversion of capital instruments, independently

or in combination with a resolution action, would prevent the

failure of the institution or the entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1) or the

group within a reasonable time-frame.

(5) For the purposes of sub-regulation (4)(a), an institution or

an entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) shall be deemed to be failing or likely to

fail where one or more of the circumstances set out in regulation

32(4) occurs.

(6) For the purposes of sub-regulation (4)(a), a group shall be

deemed to be failing or likely to fail where the group infringes or

there are objective elements to support a determination that the group,

in the near future, will infringe its consolidated prudential

requirements in a way that would justify action by the Authority

including but not limited to because the group has incurred or is likely

to incur losses that will deplete all or a significant amount of its own

funds.

(7) A relevant capital instrument issued by a subsidiary shall

not be written down to a greater extent or converted on worse terms

pursuant to sub-regulation (3)(c) than equally ranked capital

instruments at the level of the parent undertaking which have been

written down or converted.

(8) Where the appropriate authority makes a determination

referred to in sub-regulation (3), it shall, where it is responsible for a

subsidiary, or where the Authority is the consolidating supervisor,

immediately notify the European resolution authority responsible for

the institution or for the entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1) in question.

(9) Before making a determination referred to in sub-

regulation (3)(c) in relation to a subsidiary that issues relevant capital

instruments that are recognised for the purposes of meeting the own

funds requirements on an individual and on a consolidated basis, the

appropriate authority shall comply with the notification and

consultation requirements laid down in regulation 62.

(10) Before exercising the power to write down or convert

capital instruments, the Resolution Committee shall ensure that a

valuation of the assets and liabilities of the institution or the entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) is carried out in accordance with regulation 36. That

valuation shall form the basis of the calculation of the write down to

be applied to the relevant capital instruments in order to absorb losses

and the level of conversion to be applied to relevant capital

instruments in order to recapitalise the institution or the entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 60 — Recovery and Resolution Regulations, 2015 Open official source

(1) When complying with the requirement laid down in Provisions

regulation 59, the Resolution Committee shall exercise the write- governing

write-down or

down or conversion power in accordance with the priority of claims conversion

capital

under normal insolvency proceedings, in a way that produces the instruments.

following results

(a)

Common Equity Tier 1 items are reduced first in

proportion to the losses and to the extent of their capacity and

the Resolution Committee takes one or both of the actions

specified in regulation 47(1) in respect of holders of Common

Equity Tier 1 instruments;

(b) the principal amount of Additional Tier 1

instruments is written down or converted into Common Equity

Tier 1 instruments or both, to the extent required to achieve the

resolution objectives set out in regulation 31 or to the extent of

the capacity of the relevant capital instruments, whichever is

lower;

(c)

the principal amount of Tier 2 instruments is written

down or converted into Common Equity Tier 1 instruments or

both, to the extent required to achieve the resolution objectives

set out in regulation 31 or to the extent of the capacity of the

relevant capital instruments, whichever is lower.

(2) Where the principal amount of a relevant capital

instrument is written down

(a)

the reduction of that principal amount shall be

permanent, subject to any write up in accordance with the

reimbursement mechanism in regulation 46(3);

(b) no liability to the holder of the relevant capital

instrument shall remain under or in connection with that amount

of the instrument, which has been written down, except for any

liability already accrued, and any liability for damages that may

arise as a result of an appeal challenging the legality of the

exercise of the write-down power;

(c)

no compensation is paid to any holder of the

relevant capital instruments other than in accordance with sub-

regulation (3)

Provided that paragraph (b) shall not prevent the provision

of Common Equity Tier 1 instruments to a holder of relevant capital

instruments in accordance with sub-regulation (3).

(3) In order to effect a conversion of relevant capital

instruments under sub-regulation (1)(b), the Resolution Committee

may require institutions and entities referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) to issue Common

Equity Tier 1 instruments to the holders of the relevant capital

instruments. Relevant capital instruments may only be converted

where the following conditions are met

(a)

those Common Equity Tier 1 instruments are issued

by the institution or the entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) or by a parent

undertaking of the institution or the entity, referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) with the agreement

(i) where the Resolution Committee is

responsible for the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1), of the Resolution Committee or, where

relevant, the European resolution authority responsible for

the parent undertaking; or

(ii) where the Resolution Committee is

responsible for the parent undertaking, the European

resolution authority of the institution or the entity referred

to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) or, where relevant, of the Resolution

Committee;

(b) those Common Equity Tier 1 instruments are issued

prior to any issuance of shares or other instruments of

ownership by that institution or that entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) for the purposes of provision of own funds by the

Government of Malta or a government entity;

(c)

those Common Equity Tier 1 instruments are

awarded and transferred without delay following the exercise of

the conversion power;

(d) the conversion rate that determines the number of

Common Equity Tier 1 instruments that are provided in respect

of each relevant capital instrument complies with the principles

set out in regulation 50 and any guidelines developed by the

EBA pursuant to Article 50(4) of the BRRD.

(4) For the purposes of the provision of Common Equity Tier

1 instruments in accordance with sub-regulation (3), the Resolution

Committee may require institutions and entities referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

to maintain at all times the necessary prior authorisation to issue the

relevant number of Common Equity Tier 1 instruments.

(5) Where an institution meets the conditions for resolution

and the Resolution Committee decides to apply a resolution tool to

that institution, the Resolution Committee shall comply with the

requirement laid down in regulation 59(3) before applying the

resolution tool.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 61 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the relevant capital instruments are Authorities

recognised for the purposes of meeting the own funds requirements in responsible

determination.

accordance with Article 92 of the CRR on an individual basis, the

authority responsible for making the determination referred to in

regulation 59(3) shall

(a)

where the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) has been licensed in Malta in accordance with Title III of

the CRD, be the appropriate authority; or

(b) where the institution or entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) has been authorised in another Member State in accordance

with Title III of the CRD, be the overseas appropriate authority

of the Member State concerned.

(2) Where relevant capital instruments are issued by an

institution or an entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) that is a subsidiary and are

recognised for the purposes of meeting the own funds requirements

on an individual and on a consolidated basis, the authority responsible

for making the determinations referred to in regulation 59(3) shall be

the following

(a)

the authority responsible for making

the

determinations referred to in regulation 59(3)(b) shall

(i) where the institution or the entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that issued those instruments has been

established in Malta in accordance with Title III of the

CRD, be the appropriate authority; or

(ii) where the institution or the entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that issued those instruments has been

established in another Member State in accordance with

Title III of the CRD, be the overseas appropriate authority

of the Member State concerned;

(b) the authorities responsible for making the joint

determination taking the form of a joint decision referred to in

regulation 59(3)(c) shall

(i) where the Authority is the consolidating

supervisor and the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that issued those instruments has been

established in another Member State in accordance with

Title III of the CRD, be the appropriate authority and the

overseas appropriate authority of the Member State

concerned; or

(ii) where the institution or the entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that issued those instruments has been

established in Malta in accordance with Title III of the

CRD, be the appropriate authority and the overseas

appropriate authority of the Member State of the

consolidating supervisor.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 62 — Recovery and Resolution Regulations, 2015 Open official source

(1) Before making a determination referred to in Consolidated

regulation 59(3)(b), (c), (d) or (e) in relation to a subsidiary that application

procedure for

issues relevant capital instruments that are recognised for the determination.

purposes of meeting the own funds requirements on an individual and

a consolidated basis, the appropriate authority shall

(a)

when considering whether to make a determination

referred to in regulation 59(3)(b), (c), (d) or (e), notify, without

delay: where the Authority is the consolidating supervisor, the

Authority; or, where the Authority is not the consolidating

supervisor, the European regulatory authority acting as the

consolidating supervisor and the overseas appropriate authority

in the Member State where the consolidating supervisor is

located;

(b) when considering whether to make a determination

referred to in regulation 59(3)(c), notify, without delay

(i) where the Authority is responsible for an

institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1) that has issued

the relevant capital instruments in relation to which the

write down or conversion power is to be exercised if that

determination were made, the Authority, the European

regulatory authorities responsible for the other institutions

or entities referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) that have issued the

relevant capital instruments in relation to which the write

down or conversion power is to be exercised if that

determination were made, if any, and, if different, the

overseas appropriate authorities in the Member States

where those European regulatory authorities and the

consolidating supervisor are located; or

(ii) where the Authority is not responsible for

such institutions or entities, the European regulatory

authorities responsible for the institutions or entities

referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) that have issued the relevant

capital instruments in relation to which the write down or

conversion power is to be exercised if that determination

were made; and, if different, the overseas appropriate

authorities in the Member States where those European

regulatory authorities and the consolidating supervisor are

located.

(2) When making a determination referred to in regulation

59(3)(c), (d) or (e) in the case of an institution or of a group with

cross-border activity, the appropriate authority shall take into account

the potential impact of the resolution in Malta and in all the Member

States where the institution or the group operate.

(3) The appropriate authority shall accompany a notification

made pursuant to sub-regulation (1) with an explanation of the

reasons why it is considering making the determination in question.

(4) Where a notification has been made pursuant to sub-

regulation (1), the appropriate authority, after consulting the

authorities notified, shall assess the following matters

(a)

whether an alternative measure to the exercise of the

write down or conversion power in accordance with regulation

59(3) is available;

(b) if such an alternative measure is available, whether

it can feasibly be applied;

(c)

if such an alternative measure could feasibly be

applied, whether there is a realistic prospect that it would

address, in an adequate time-frame, the circumstances that

would otherwise require a determination referred to in

regulation 59(3) to be made.

(5) For the purposes of sub-regulation (4), alternative

measures shall mean early intervention measures referred to in

regulation 27, measures referred to in regulation 9(1) of the Banking

Act (Supervisory Review) Regulations, measures referred to in

Schedule III of the Investment Services Act (Supervisory Review)

Regulations or a transfer of funds or capital from the parent

undertaking.

(6) Where, pursuant to sub-regulation (4), the appropriate

authority, after consulting the authorities notified in terms of sub-

regulation (1), assesses that one or more alternative measures are

available, can feasibly be applied and would deliver the outcome

referred to in sub-regulation (4)(c), it shall ensure that those measures

are applied.

(7) Where, in a case referred to in sub-regulation (1)(a), and

pursuant to sub-regulation (4), the appropriate authority, after

consulting the authorities notified in terms of sub-regulation (1),

assesses that no alternative measures are available that would deliver

the outcome referred to in sub-regulation (4)(c), the appropriate

authority shall decide whether the determination referred to in

regulation 59(3) under consideration is appropriate.

(8) Where the appropriate authority decides to make a

determination under regulation 59(3)(c), it shall immediately notify

the overseas appropriate authorities of the Member States in which

the affected subsidiaries are located and the determination shall take

the form of a joint decision as set out in regulation 92(4) and (5). In

the absence of a joint decision, no determination under regulation

59(3)(c) shall be made.

(9) Where an affected subsidiary is located in Malta, the

Resolution Committee shall promptly implement a decision to write

down or convert capital instruments made in accordance with this

regulation, having due regard to the urgency of the circumstances.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 63 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall have all the powers General

necessary to apply the resolution tools to institutions and to entities resolution

powers.

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) that meet the applicable conditions for resolution. In

particular, the Resolution Committee shall have the following

resolution powers, which may be exercised individually or in any

combination

(a)

the power to require any person to provide any

information required for the Resolution Committee to decide

upon and prepare a resolution action, including updates and

supplements of information provided in the resolution plans and

including requiring information to be provided through on-site

inspections;

(b) the power to take control of an institution under

resolution and exercise all the rights and powers conferred upon

the shareholders, other owners and the board of directors of the

institution under resolution;

(c)

the power to transfer shares or other instruments of

ownership issued by an institution under resolution;

(d) the power to transfer to another entity, with the

consent of that entity, rights, assets or liabilities of an institution

under resolution;

(e)

the power to reduce, including to reduce to zero, the

principal amount of or outstanding amount due in respect of

eligible liabilities, of an institution under resolution;

(f)

the power to convert eligible liabilities of an

institution under resolution into ordinary shares or other

instruments of ownership of that institution or entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1), a relevant parent institution or a bridge

institution to which assets, rights or liabilities of the institution

or the entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) are transferred;

(g) the power to cancel debt instruments issued by an

institution under resolution except for secured liabilities subject

to regulation 44(2);

(h) the power to reduce, including to reduce to zero, the

nominal amount of shares or other instruments of ownership of

an institution under resolution and to cancel such shares or other

instruments of ownership;

(i)

the power to require an institution under resolution

or a relevant parent institution to issue new shares or other

instruments of ownership or other capital instruments, including

preference shares and contingent convertible instruments;

(j)

the power to amend or alter the maturity of debt

instruments and other eligible liabilities issued by an institution

under resolution or amend the amount of interest payable under

such instruments and other eligible liabilities, or the date on

which the interest becomes payable, including by suspending

payment for a temporary period, except for secured liabilities

subject to regulation 44(2);

(k) the power to close out and terminate financial

contracts or derivatives contracts for the purposes of applying

regulation 49;

(l)

the power to remove or replace the board of

directors and senior management of an institution under

resolution;

(m) the power to require the Authority to assess the

buyer of a qualifying holding in a timely manner by way of

derogation from the time-limits laid down in Article 22 of the

CRD and Article 12 of Directive 2014/65/EU.

(2) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall not be subject to

any of the following requirements that would otherwise apply by

virtue of Maltese law or contract or otherwise

(a)

subject to regulation 3(4) and regulation 85(1),

requirements to obtain approval or consent from any person

either public or private, including the shareholders or creditors

of the institution under resolution;

(b) prior to the exercise of the power, procedural

requirements to notify any person including any requirement to

publish any notice or prospectus or to file or register any

document with any other authority

Provided that the Resolution Committee can exercise the

powers under this regulation irrespective of any restriction on, or

requirement for consent for, transfer of the financial instruments,

rights, assets or liabilities in question that might otherwise apply

Provided further that paragraph (b) shall be without

prejudice to the requirements laid down in regulations 81 and 83 and

any notification requirements under the Union State aid framework.

(3) Where any of the powers listed in sub-regulation (1) are

not applicable to an entity as a result of its specific legal form, the

Resolution Committee shall have powers which are as similar as

possible including in terms of their effects.

(4) Where the Resolution Committee exercises it powers

pursuant to sub-regulation (3), the safeguards provided for in these

regulations, or safeguards that deliver the same effect, shall be

applied to the persons affected, including shareholders, creditors and

counterparties.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 64 — Recovery and Resolution Regulations, 2015 Open official source

(1) When exercising a resolution power, the Resolution Ancillary

resolution

Committee shall have the power to

powers.

(a)

subject to regulation 78, provide for a transfer to

take effect free from any liability or encumbrance affecting the

financial instruments, rights, assets or liabilities transferred; for

that purpose, any right of compensation in accordance with

these regulations shall not be considered to be a liability or an

encumbrance;

(b) remove rights to acquire further shares or other

instruments of ownership;

(c)

require the listing authority to discontinue or

suspend the admission to trading on a regulated market or the

official listing of financial instruments pursuant to Directive

2001/34/EC of the European Parliament and of the Council of

28 May 2001 on the admission of securities to official stock

exchange listing and on information to be published on those

securities;

(d) provide for the recipient to be treated as if it were

the institution under resolution for the purposes of any rights or

obligations of, or actions taken by, the institution under

resolution, including, subject to regulations 38 and 40, any

rights or obligations relating to participation in a market

infrastructure;

(e)

require the institution under resolution or the

recipient to provide the other with information and assistance;

and

(f)

cancel or modify the terms of a contract to which the

institution under resolution is a party or substitute a recipient as

a party.

(2) The Resolution Committee shall exercise the powers

specified in sub-regulation (1) where it is considered by the

Resolution Committee to be appropriate to help to ensure that a

resolution action is effective or to achieve one or more resolution

objectives.

(3) When exercising a resolution power, the Resolution

Committee shall have the power to provide for continuity

arrangements necessary to ensure that the resolution action is

effective and, where relevant, the business transferred may be

operated by the recipient. Such continuity arrangements shall include,

in particular

(a)

the continuity of contracts entered into by the

institution under resolution, so that the recipient assumes the

rights and liabilities of the institution under resolution relating

to any financial instrument, right, asset or liability that has been

transferred and is substituted for the institution under resolution,

expressly or implicitly in all relevant contractual documents;

(b) the substitution of the recipient for the institution

under resolution in any legal proceedings relating to any

financial instrument, right, asset or liability that has been

transferred.

(4) The powers in sub-article (1)(d) and sub-article (3)(b) shall

not affect the following

(a)

the right of an employee of the institution under

resolution to terminate a contract of employment;

(b) subject to regulations 69, 70 and 71, any right of a

party to a contract to exercise rights under the contract,

including the right to terminate, where entitled to do so in

accordance with the terms of the contract by virtue of an act or

omission by the institution under resolution prior to the relevant

transfer, or by the recipient after the relevant transfer.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 65 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall have the power to Power to require

require an institution under resolution, or any of its group entities, to the

services and

provide any services or facilities that are necessary to enable a facilities.

recipient to operate effectively the business transferred to it

Provided that this sub-regulation shall apply even where

the institution under resolution or relevant group entity has entered

into normal insolvency proceedings.

(2) The Resolution Committee shall have powers to enforce

obligations imposed, pursuant to sub-regulation (1), on group entities

established in their territory by European resolution authorities in

other Member States.

(3) The services and facilities referred to in sub-regulations (1)

and (2) are restricted to operational services and facilities and do not

include any form of financial support.

(4) The services and facilities provided in accordance with

sub-regulations (1) and (2) shall be on the following terms

(a)

where the services and facilities were provided

under an agreement to the institution under resolution

immediately before the resolution action was taken and for the

duration of that agreement, on the same terms;

(b)

where there is no agreement or where the agreement

has expired, on reasonable terms.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 66 Power to enforce crisis management measures or crisis prevention measures by other Member States. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where a transfer of shares, other instruments of

ownership, or assets, rights or liabilities includes assets that are

located in a Member State other than in Malta or rights or liabilities

under the law of a Member State other than Malta, the transfer shall

have effect in or under the law of that other Member State.

(2) Where a European resolution authority has made or intends

to make a transfer of shares, other instruments of ownership, or

assets, rights or liabilities including assets that are located in Malta or

rights or liabilities under the Maltese law, the Resolution Committee

shall provide such a European resolution authority with all reasonable

assistance to ensure that the shares or other instruments of ownership

or assets, rights or liabilities are transferred to the recipient in

accordance with any applicable requirements of Maltese law.

(3) Shareholders, creditors and third parties that are affected

by the transfer of shares, other instruments of ownership, assets,

rights or liabilities referred to in sub-regulation (1) shall not be

entitled to prevent, challenge, or set aside the transfer under any

provision of law of the Member State where the assets are located or

of the law governing the shares, other instruments of ownership,

rights or liabilities.

(4) Where a European resolution authority exercises the write-

down or conversion powers, including in relation to capital

instruments in accordance with regulation 59, and the eligible

liabilities or relevant capital instruments of the institution under

resolution include the following

(a)

instruments or liabilities that are governed by the

law of Malta;

(b)

liabilities owed to creditors located in Malta,

the Resolution Committee shall ensure that the principal amount of

those liabilities or instruments is reduced, or liabilities or instruments

are converted, in accordance with the exercise of the write-down or

conversion powers by the European resolution authority.

(5) Creditors that are affected by the exercise of write-down or

conversion powers referred to in sub-regulation (4) shall not be

entitled to challenge the reduction of the principal amount of the

instrument or liability or its conversion, as the case may be, under any

provision of Maltese law.

(6) Where the Resolution Committee exercises the write-down

or conversion powers, the following shall be determined in

accordance with Maltese law

(a)

the right for shareholders, creditors and third parties

to challenge, by way of appeal pursuant to regulation 85, a

transfer of shares, other instruments of ownership, assets, rights

or liabilities referred to in sub-regulation (1);

(b) the right for creditors to challenge, by way of appeal

pursuant to regulation 85, the reduction of the principal amount,

or the conversion, of an instrument or liability covered by sub-

regulation (4)(a) or (b);

(c)

the safeguards for partial transfers, as referred to in

regulations 73 to 80, in relation to assets, rights or liabilities

referred to in sub-regulation (1).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 67 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the resolution action involves an action taken Power in respect

in respect of assets located in a third country or shares, other of

liabilities,

instruments of ownership, rights or liabilities governed by the law of shares

instruments of

a third country, the Resolution Committee may require that

ownership

located in third

countries.

(a)

the administrator, receiver or other person

exercising control of the institution under resolution and the

recipient take all necessary steps to ensure that the transfer,

write down, conversion or action becomes effective;

(b) the administrator, receiver or other person

exercising control of the institution under resolution hold the

shares, other instruments of ownership, assets or rights or

discharge the liabilities on behalf of the recipient until the

transfer, write down, conversion or action becomes effective;

(c)

the reasonable expenses of the recipient properly

incurred in carrying out any action required under paragraphs

(a) and (b) are met in any of the ways referred to in regulation

37(7).

(2) Where the Resolution Committee assesses that, in spite of

all the necessary steps taken by the administrator, receiver or other

person in accordance with sub-regulation (1)(a), it is highly unlikely

that the transfer, conversion or action will become effective in

relation to certain assets located in a third country or certain shares,

other instruments of ownership, rights or liabilities under the law of a

third country, the Resolution Committee shall not proceed with the

transfer, write down, conversion or action. If it has already ordered

the transfer, write down, conversion or action, that order shall be void

in relation to the assets, shares, instruments of ownership, rights or

liabilities concerned.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 68 Exclusion of certain contractual terms in early intervention and resolution. — Recovery and Resolution Regulations, 2015 Open official source

(1) A crisis prevention measure or a crisis management

measure taken in relation to an entity in accordance with these

regulations, including the occurrence of any event directly linked to

the application of such a measure, shall not, in itself, under a contract

entered into by the entity, be deemed to be an enforcement event

within the meaning of Directive 2002/47/EC or as insolvency

proceedings within the meaning of Directive 98/26/EC provided that

(a)

the substantive obligations under the contract,

including payment and delivery obligations and the provision of

collateral, continue to be performed;

(b)

the contract is entered into by

(i) a subsidiary, the obligations under which are

guaranteed or otherwise supported by the parent

undertaking or by any group entity; or

(ii) any entity of a group which includes cross-

default provisions.

(2) Where third country resolution proceedings are recognised

pursuant to regulation 94, or otherwise where the Resolution

Committee so decides, such proceedings shall for the purposes of this

regulation constitute a crisis management measure.

(3) Where the substantive obligations under the contract,

including payment and delivery obligations, and provision of

collateral, continue to be performed, a crisis prevention measure or a

crisis management measure, including the occurrence of any event

directly linked to the application of such a measure, shall not, in

itself, make it possible for anyone to

(a)

exercise any termination, suspension, modification,

netting or set-off rights, including in relation to a contract

entered into by

(i) a subsidiary, the obligations under which are

guaranteed or otherwise supported by a group entity;

(ii) any group entity which includes cross-default

provisions;

(b) obtain possession, exercise control or enforce any

security over any property of the institution or the entity

referred to in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1) concerned or any group entity in relation to a

contract which includes cross-default provisions;

(c)

affect any contractual rights of the institution or the

entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) concerned or any group entity in

relation to a contract which includes cross-default provisions.

(4) This regulation shall not affect the right of a person to take

an action referred to in sub-regulation (3) where that right arises by

virtue of an event other than the crisis prevention measure, the crisis

management measure or the occurrence of any event directly linked

to the application of such a measure.

(5) A suspension or restriction under regulations 69, 70 or 71

shall not constitute non-performance of a contractual obligation for

the purposes of sub-regulations (1) and (2).

(6) The provisions contained in this regulation shall be

considered to be overriding mandatory provisions within the meaning

of Article 9 of Regulation (EC) No 593/2008 of the European

Parliament and of the Council of 17 June 2008 on the law applicable

to contractual obligations (Rome I).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 69 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee may suspend any Power to

payment or delivery obligations pursuant to any contract to which an suspend

obligations.

institution under resolution is a party from the publication of a notice

of the suspension in accordance with regulation 83(4) until midnight

at the end of the business day following that publication.

(2) When a payment or delivery obligation would have been

due during the suspension period, the payment or delivery obligation

shall be due immediately upon expiry of the suspension period.

(3) If the payment or delivery obligations under a contract of

an institution under resolution are suspended under sub-regulation

(1), the payment or delivery obligations of the counterparties of the

institution under resolution under that contract shall be suspended for

the same period of time.

(4) Any suspension under sub-regulation (1) shall not apply

to

(a)

eligible deposits;

(b) payment and delivery obligations owed to systems

or operators of systems designated for the purposes of Directive

98/26/EC, central counterparties, and central banks;

(c)

eligible claims for the purpose of Directive 97/9/EC.

(5) When exercising a power under this regulation, the

Resolution Committee shall have regard to the impact the exercise of

that power might have on the orderly functioning of financial

markets.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 70 Power to restrict the enforcement of security interests. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee may restrict secured

creditors of an institution under resolution from enforcing security

interests in relation to any assets of that institution under resolution

from the publication of a notice of the restriction in accordance with

regulation 83(4) until midnight at the end of the business day

following that publication.

(2) The Resolution Committee shall not exercise the power

referred to in sub-regulation (1) in relation to any security interest of

systems or operators of systems designated for the purposes of

Directive 98/26/EC, central counterparties, and central banks over

assets pledged or provided by way of margin or collateral by the

institution under resolution.

(3) Where regulation 80 applies, the Resolution Committee,

together with the European resolution authorities concerned, shall

ensure that any restrictions imposed pursuant to the power referred to

in sub-regulation (1) are consistent for all group entities in relation to

which a resolution action is taken.

(4) When exercising a power under this regulation, the

Resolution Committee shall have regard to the impact the exercise of

that power might have on the orderly functioning of financial

markets.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 71 Power to temporarily suspend termination rights. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee may suspend the

termination rights of any party to a contract with an institution under

resolution from the publication of the notice pursuant to regulation

83(4) until midnight at the end of the business day following that

publication, provided that the payment and delivery obligations and

the provision of collateral continue to be performed.

(2) The Resolution Committee may suspend the termination

rights of any party to a contract with a subsidiary of an institution

under resolution where

(a)

the obligations under that contract are guaranteed or

are otherwise supported by the institution under resolution;

(b) the termination rights under that contract are based

solely on the insolvency or financial condition of the institution

under resolution; and

(c)

in the case of a transfer power that has been or may

be exercised in relation to the institution under resolution,

either

(i) all the assets and liabilities of the subsidiary

relating to that contract have been or may be transferred to

and assumed by the recipient; or

(ii) the Resolution Committee provides in any

other way adequate protection for such obligations

Provided that the suspension shall take effect from the

publication of the notice pursuant to regulation 83(4) until midnight

in the Member State where the subsidiary of the institution under

resolution is established on the business day following that

publication.

(3) Any suspension under sub-regulation (1) and (2) shall not

apply to systems or operators of systems designated for the purposes

of Directive 98/26/EC, central counterparties, or central banks.

(4) A person may exercise a termination right under a contract

before the end of the period referred to in sub-regulations (1) and (2)

if that person receives notice from the Resolution Committee that the

rights and liabilities covered by the contract shall not be

(a)

transferred to another entity; or

(b) subject to write down or conversion on the

application of the bail-in tool in accordance with regulation

43(2)(a).

(5) Where the Resolution Committee exercises the power

specified in sub-regulations (1) and (2) to suspend termination rights,

and where no notice has been given pursuant to sub-regulation (4),

those rights may be exercised on the expiry of the period of

suspension, subject to regulation 68, as follows

(a)

if the rights and liabilities covered by the contract

have been transferred to another entity, a counterparty may

exercise termination rights in accordance with the terms of that

contract only on the occurrence of any continuing or subsequent

enforcement event by the recipient entity;

(b) if the rights and liabilities covered by the contract

remain with the institution under resolution and the Resolution

Committee has not applied the bail-in tool in accordance with

regulation 43(2)(a) to that contract, a counterparty may exercise

termination rights in accordance with the terms of that contract

on the expiry of a suspension under sub-regulation (1).

(6) When exercising a power under this regulation, the

Resolution Committee shall have regard to the impact the exercise of

that power might have on the orderly functioning of the financial

markets.

(7) The Authority or the Resolution Committee may require an

institution or an entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) to maintain detailed records of

financial contracts.

(8) Upon the request of the Authority or the Resolution

Committee, a trade repository shall make the necessary information

available to the Authority and the Resolution Committee to enable

them to fulfil their respective responsibilities and mandates in

accordance with Article 81 of Regulation (EU) No 648/2012.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 72 Exercise of the resolution powers. — Recovery and Resolution Regulations, 2015 Open official source

(1) In order to take a resolution action, the Resolution

Committee may exercise control over the institution under resolution,

so as to

(a)

operate and conduct the activities and services of the

institution under resolution with all the powers of its

shareholders and board of directors; and

(b) manage and dispose of the assets and property of the

institution under resolution

Provided that the control referred to in this sub-regulation

may be exercised directly by the Resolution Committee or indirectly

by a person or persons appointed by the Resolution Committee.

Voting rights conferred by shares or other instruments of ownership

of the institution under resolution cannot be exercised during the

period of resolution.

(2) Subject to regulation 85(1), the Resolution Committee may

take a resolution action through executive order in accordance with

national administrative competences and procedures, without

exercising control over the institution under resolution.

(3) The Resolution Committee shall decide in each particular

case whether it is appropriate to carry out the resolution action

through the means specified in sub-regulations (1) or (2), having

regard to the resolution objectives and the general principles

governing resolution, the specific circumstances of the institution

under resolution in question and the need to facilitate the effective

resolution of cross-border groups.

(4) The Resolution Committee shall not be deemed to be a

shadow director or a de facto director.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 73 — Recovery and Resolution Regulations, 2015 Open official source

The Resolution Committee shall ensure that, where one or Treatment of

more resolution tools have been applied and, in particular for the shareholders

and creditors in

the case of

purposes of regulation 75

partial transfers

and application

except where paragraph (b) applies, where the of

(a)

tool.

Resolution Committee transfers only parts of the rights, assets

and liabilities of the institution under resolution, the

shareholders and those creditors whose claims have not been

transferred, receive in satisfaction of their claims at least as

much as what they would have received if the institution under

resolution had been wound up under normal insolvency

proceedings at the time when the decision referred to in

regulation 82 was taken;

(b) where the Resolution Committee applies the bail-in

tool, the shareholders and creditors whose claims have been

written down or converted to equity do not incur greater losses

than they would have incurred if the institution under resolution

had been wound up under normal insolvency proceedings

immediately at the time when the decision referred to in

regulation 82 was taken.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 74 — Recovery and Resolution Regulations, 2015 Open official source

(1) For the purposes of assessing whether shareholders Valuation of

and creditors would have received better treatment if the institution difference

treatment.

under resolution had entered into normal insolvency proceedings,

including but not limited to, for the purpose of regulation 73, a

valuation shall be carried out by an independent person as soon as

possible after the resolution action or actions have been effected. That

valuation shall be distinct from the valuation carried out under

regulation 36.

(2) The valuation in sub-regulation (1) shall determine

(a) the treatment that shareholders and creditors, or the

relevant deposit guarantee schemes, would have received if the

institution under resolution with respect to which the resolution

action or actions have been effected had entered normal

insolvency proceedings at the time when the decision referred to

in regulation 82 was taken;

(b)

the actual treatment that shareholders and creditors

have received, in the resolution of the institution under

resolution; and

(c)

if there is any difference between the treatment

referred to in paragraph (a) and the treatment referred to in

paragraph (b).

(3) The valuation shall

(a)

assume that the institution under resolution with

respect to which the resolution action or actions have been

effected, would have entered normal insolvency proceedings at

the time when the decision referred to in regulation 82 was

taken;

(b) assume that the resolution action or actions had not

been effected;

(c)

disregard any provision of extraordinary public

financial support to the institution under resolution.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 75 Safeguard for shareholders and creditors. — Recovery and Resolution Regulations, 2015 Open official source

If the valuation carried out under regulation 74 determines

that any shareholder or creditor referred to in regulation 73, or the

deposit guarantee scheme in accordance with regulations 109(1) and

(2), has incurred greater losses than it would have incurred in a

winding up under normal insolvency proceedings, the shareholder or

creditor or the deposit guarantee scheme shall be entitled to the

payment of the difference from the resolution financing

arrangements.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 76 Safeguard for counterparties in partial transfers. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee transfers some but

not all of the assets, rights or liabilities of an institution under

resolution to another entity or, in the exercise of a resolution tool,

from a bridge institution or asset management vehicle to another

person, and where the Resolution Committee or the European

resolution authority exercises the powers specified in regulation

64(1)(f), the provisions of this regulation shall apply.

(2) The following arrangements and the counterparties to the

following arrangements shall be appropriately protected in the

circumstances set out in sub-regulation (1)

(a)

security arrangements, under which a person has by

way of security an actual or contingent interest in the assets or

rights that are subject to transfer, irrespective of whether that

interest is secured by specific assets or rights or by way of a

general hypothec, floating charge or similar arrangement;

(b) title transfer financial collateral arrangements under

which collateral to secure or cover the performance of specified

obligations is provided by a transfer of full ownership of assets

from the collateral provider to the collateral taker, on terms

providing for the collateral taker to transfer assets if those

specified obligations are performed;

(c)

set-off arrangements under which two or more

claims or obligations owed between the institution under

resolution and a counterparty can be set off against each other;

(d)

netting arrangements;

(e)

covered bonds;

(f)

structured

finance

arrangements,

including

securitisations and instruments used for hedging purposes which

form an integral part of the cover pool and which according to

Maltese law are secured in a way similar to the covered bonds,

which involve the granting and holding of security by a party to

the arrangement or a trustee, agent or nominee

Provided that the form of protection that is appropriate, for

the classes of arrangements specified in paragraphs (a) to (f) is further

specified in regulations 77 to 80, and shall be subject to the

restrictions specified in regulations 68 to 71.

(3) The requirement under sub-regulation (2) applies

irrespective of the number of parties involved in the arrangements

and of whether the arrangements

(a)

are created by contract, trusts or other means, or

arise automatically by operation of law;

(b) arise under or are governed in whole or in part by

the law of another Member State or of a third country.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 77 — Recovery and Resolution Regulations, 2015 Open official source

(1) Title transfer financial collateral arrangements and Protection for

set-off and netting arrangements shall be appropriately protected so as financial

collateral, set

to prevent the transfer of some, but not all, of the rights and liabilities off

agreements.

that are protected under a title transfer financial collateral

arrangement, a set-off arrangement or a netting arrangement between

the institution under resolution and another person and the

modification or termination of rights and liabilities that are protected

under such a title transfer financial collateral arrangement, a set-off

arrangement or a netting arrangement through the use of ancillary

powers

Provided that such rights and liabilities shall be treated as

protected under such an arrangement if the parties to the arrangement

are entitled to set-off or net those rights and liabilities.

(2) Notwithstanding sub-regulation (1), where necessary in

order to ensure the availability of the covered deposits, the Resolution

Committee may

(a)

transfer covered deposits which are part of any of

the arrangements mentioned in sub-regulation (1) without

transferring other assets, rights or liabilities that are part of the

same arrangement; and

(b) transfer, modify or terminate those assets, rights or

liabilities without transferring the covered deposits.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 78 Protection for security arrangements. — Recovery and Resolution Regulations, 2015 Open official source

(1) Liabilities secured under a security arrangement

shall be appropriately protected so as to prevent one of the following

(a)

the transfer of assets against which the liability is

secured unless that liability and benefit of the security are also

transferred;

(b) the transfer of a secured liability unless the benefit

of the security are also transferred;

(c)

the transfer of the benefit of the security unless the

secured liability is also transferred; or

(d) the modification or termination of a security

arrangement through the use of ancillary powers, if the effect of

that modification or termination is that the liability ceases to be

secured.

(2) Notwithstanding sub-regulation (1), where necessary in

order to ensure availability of the covered deposits, the Resolution

Committee may

(a)

transfer covered deposits which are part of any of

the arrangements mentioned in sub-regulation (1) without

transferring other assets, rights or liabilities that are part of the

same arrangement; and

(b) transfer, modify or terminate those assets, rights or

liabilities without transferring the covered deposits.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 79 — Recovery and Resolution Regulations, 2015 Open official source

(1) Structured

finance

arrangements

including Protection for

arrangements referred to in regulation 76(2)(e) and (f) shall be structured

finance

appropriately protected so as to prevent either of the following

arrangements

and covered

bonds.

(a)

the transfer of some, but not all, of the assets, rights

and liabilities which constitute or form part of a structured

finance arrangement, including arrangements referred to in

regulation 76(2)(e) and (f), to which the institution under

resolution is a party;

(b) the termination or modification through the use of

ancillary powers of the assets, rights and liabilities which

constitute or form part of a structured finance arrangement,

including arrangements referred to in regulation 76(2)(e) and

(f), to which the institution under resolution is a party.

(2) Notwithstanding sub-regulation (1), where necessary in

order to ensure availability of the covered deposits, the Resolution

Committee may

(a)

transfer covered deposits which are part of any of

the arrangements mentioned in sub-regulation (1) without

transferring other assets, rights or liabilities that are part of the

same arrangement, and

(b) transfer, modify or terminate those assets, rights or

liabilities without transferring the covered deposits.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 80 — Recovery and Resolution Regulations, 2015 Open official source

(1) The application of a resolution tool shall not affect Partial transfers

the operation of systems and rules of systems covered by Directive protection

trading, clearing

and settlement

98/26/EC, where the Resolution Committee

systems.

(a)

transfers some but not all of the assets, rights or

liabilities of an institution under resolution to another entity; or

(b) uses powers under regulation 64 to cancel or amend

the terms of a contract to which the institution under resolution

is a party or to substitute a recipient as a party.

(2) In particular, a transfer, cancellation or amendment as

referred to in sub-regulation (1) shall not revoke a transfer order in

contravention of Article 5 of Directive 98/26/EC; and shall not

modify or negate the enforceability of transfer orders and netting as

required by Articles 3 and 5 of that Directive, the use of funds,

securities or credit facilities as required by Article 4 thereof or

protection of collateral security as required by Article 9 thereof.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 81 — Recovery and Resolution Regulations, 2015 Open official source

(1)

The board of directors of an institution or any entity Notification

requirements.

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) shall be required to notify the Authority where they

consider that the institution or the entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1) is failing or

likely to fail, within the meaning specified in regulation 32(4).

(2) The Authority shall inform the Resolution Committee and

any relevant European resolution authorities of any notifications

received under sub-regulation (1), and of any crisis prevention

measures, or any actions referred to in regulation 9 of the Banking

Act (Supervisory Review) Regulations and Schedule III of the

Investment Services Act (Supervisory Review) Regulations, they

require an institution or an entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1) to take.

(3) Where the Authority or Resolution Committee determines

that the conditions referred to in regulation 32(1)(a) and (b) are met in

relation to an institution or an entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1), it shall

communicate that determination without delay to the following

authorities

(a)

where different, the Resolution Committee for that

institution or entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1);

(b) where different, the Authority for that institution or

entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1);

(c)

the European regulatory authority of any branch of

that institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1);

(d) the European resolution authority of any branch of

that institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1);

(e)

the Central Bank;

(f)

the deposit guarantee scheme to which a credit

institution is affiliated where necessary to enable the functions

of the deposit guarantee scheme to be discharged;

(g) where different, the body in charge of the resolution

financing arrangements where necessary to enable the functions

of the resolution financing arrangements to be discharged;

(h) where applicable, the European resolution authority

acting as the group-level resolution authority;

(i)

the Ministry responsible for Finance;

(j)

where the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) is subject to supervision on consolidated basis under

Chapter 3 of Title VII of the CRD, the European regulatory

authority acting as the consolidating supervisor; and

(k)

the ESRB and the Central Bank.

(4) Where the transmission of information referred to in sub-

regulation (3)(f) and (g) does not guarantee the appropriate level of

confidentiality, the Authority or the Resolution Committee shall

establish alternative communication procedures that achieve the same

objectives while ensuring the appropriate level of confidentiality.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 82 — Recovery and Resolution Regulations, 2015 Open official source

(1) On receiving a communication from the Authority Decision of the

pursuant to regulation 81(3), or on its own initiative, the Resolution resolution

authority.

Committee shall determine, in accordance with regulations 32(1) and

33, whether the conditions of regulation 81(3) are met in respect of

the institution or the entity referred to in paragraphs (b), (c) or (d) of

the definition "entity" in regulation 2(1) in question.

(2) A decision whether or not to take resolution action in

relation to an institution or an entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) shall contain the

following information

(a)

the reasons for that decision, including the

determination that the institution meets or does not meet the

conditions for resolution;

(b) the action that the Resolution Committee intends to

take including, where appropriate, the determination to apply

for winding up, the appointment of an administrator or any other

measure under applicable normal insolvency proceedings or,

subject to regulation 37(9), under Maltese law.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 83 — Recovery and Resolution Regulations, 2015 Open official source

(1) As soon as reasonably practicable, after taking a Procedural

resolution action, the Resolution Committee shall comply with the obligations

resolution

authorities.

requirements laid down in sub-regulations (2), (3) and (4).

(2) The Resolution Committee shall notify the institution

under resolution and the following authorities

(a)

the Authority;

(b) the European regulatory authority of any branch of

the institution under resolution;

(c)

the Central Bank;

(d) the deposit guarantee scheme to which the credit

institution under resolution is affiliated;

(e)

where different, the body in charge of the resolution

financing arrangements;

(f)

where applicable, the European resolution authority

acting as the group-level resolution authority;

(g)

the Ministry responsible for Finance;

(h) where the institution under resolution is subject to

supervision on a consolidated basis under Chapter 3 of Title VII

of the CRD, the European regulatory authority acting as the

consolidating supervisor;

(i)

the Central Bank and the ESRB;

(j)

the European Commission, the European Central

Bank, the European Securities and Markets Authority

established by Regulation (EU) No 1095/2010, the European

Investment and Occupational Pensions Authority established by

Regulation (EU) No 1094/2010 and the EBA;

(k) where the institution under resolution is an

institution as defined in Article 2(b) of Directive 98/26/EC, the

operators of the systems in which it participates.

(3) The notification referred to in sub-regulation (2) shall

include a copy of any order or instrument by which the relevant

powers are exercised and indicate the date from which the resolution

action or actions are effective.

(4) The Authority shall publish or ensure the publication of a

copy of the order or instrument by which the resolution action is

taken, or a notice summarising the effects of the resolution action,

and in particular the effects on retail customers and, if applicable, the

terms and period of suspension or restriction referred to in regulations

69, 70 and 71, by the following means

(a)

on the official website of the Authority, and on the

website of the EBA;

(b)

on the website of the institution under resolution;

(c)

where the shares, other instruments of ownership or

debt instruments of the institution under resolution are admitted

to trading on a regulated market, the means used for the

disclosure of regulated information concerning the institution

under resolution in accordance with Article 21(1) of Directive

2004/109/EC of the European Parliament and of the Council of

15 December 2004 on the harmonisation of transparency

requirements in relation to information about issuers whose

securities are admitted to trading on a regulated market and

amending Directive 2001/34/EC.

(5) If the shares, instruments of ownership or debt instruments

are not admitted to trading on a regulated market, the Resolution

Committee shall ensure that the documents providing proof of the

instruments referred to in sub-regulation (4) are sent to the

shareholders and creditors of the institution under resolution that are

known through the registers or databases of the institution under

resolution which are available to the Resolution Committee.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 84 — Recovery and Resolution Regulations, 2015 Open official source

(1) The requirements of professional secrecy shall be Confidentiality.

binding in respect of the following persons

(a)

the Resolution Committee;

(b)

the Resolution Authority;

(c)

the Authority;

(d)

the Ministry responsible for Finance;

(e)

special managers or temporary administrators

appointed under these regulations;

(f)

potential acquirers that are contacted by the

Authority or solicited by the Resolution Committee, irrespective

of whether that contact or solicitation was made as preparation

for the use of the sale of business tool, and irrespective of

whether the solicitation resulted in an acquisition;

(g) auditors, accountants, legal and professional

advisors, valuers and other experts directly or indirectly

engaged by the Resolution Committee, Authority, the Ministry

responsible for Finance or by the potential acquirers referred to

in paragraph (e);

(h) the management committee administering the

depositor compensation scheme;

(i)

the management committee administering the

investor compensation scheme;

(j)

the body in charge of the resolution financing

arrangements;

(k) the Central Bank and other authorities or bodies that

may be involved in the resolution process;

(l)

a bridge institution or an asset management vehicle;

(m) any other persons who provide or have provided

services directly or indirectly, permanently or occasionally, to

persons referred to in paragraphs (a) to (k);

(n) senior management, directors, and employees of the

bodies or entities referred to in paragraphs (a) to (k) before,

during and after their appointment.

(2) With a view to ensuring that the confidentiality

requirements laid down in sub-regulations (1) and (3) are complied

with, the persons in sub-regulation (1)(a), (b), (c), (g), (h), (j) and (k)

shall ensure that there are internal rules in place, including rules to

secure secrecy of information between persons directly involved in

the resolution process.

(3) Without prejudice to the generality of the requirements

under sub-regulation (1), the persons referred to in sub-regulation (1)

shall be prohibited from disclosing confidential information received

during the course of their professional activities or from the Authority

or the Resolution Committee in connection with its functions under

these regulations, to any person or authority unless it is in the exercise

of their functions under these regulations or in summary or collective

form such that individual institutions or entities referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

cannot be identified or with the express and prior consent of the

authority or the institution or the entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1) which provided

the information

Provided that no confidential information shall be

disclosed by the persons referred to in sub-regulation (1) and the

possible effects of disclosing information on the public interest as

regards financial, monetary or economic policy, on the commercial

interests of natural and legal persons, on the purpose of inspections,

on investigations and on audits, shall be assessed

Provided further that the procedure for checking the effects

of disclosing information shall include a specific assessment of the

effects of any disclosure of the contents and details of the recovery

and resolution plan as referred to in regulations 5, 7, 10, 11 and 12

and the result of any assessment carried out under regulations 6, 8 and

15. (4) Any person or entity referred to in sub-regulation (1) shall

be subject to civil liability in the event of an infringement of this

regulation, in accordance with Maltese law.

(5) This regulation shall not prevent

(a)

employees and experts of the bodies or entities

referred to in sub-regulation (1)(a) to (j) from sharing

information among themselves within each body or entity; or

(b) the Resolution Committee and the Authority,

including their employees and experts, from sharing

information with each other and with European resolution

authorities in the other Member States, European regulatory

authorities, the Ministry responsible for Finance, competent

ministries in the other Member States, the Central Bank, central

banks in the other Member States, deposit guarantee schemes,

investor compensation schemes, authorities responsible for

normal insolvency proceedings in the other Member States,

authorities responsible for maintaining the stability of the

financial system in the other Member States through the use of

macroprudential rules, persons charged with carrying out

statutory audits of accounts, the EBA, or, subject to regulation

98, third-country authorities that carry out equivalent functions

to the Resolution Committee, or, subject to strict confidentiality

requirements, to a potential acquirer for the purposes of

planning or carrying out a resolution action.

(6) Notwithstanding any other provision of this regulation, the

exchange of information with any of the following may be authorised

(a)

subject to strict confidentiality requirements, any

other person where necessary for the purposes of planning or

carrying out a resolution action;

(b) parliamentary enquiry committees, courts of

auditors and other entities in charge of enquiries in Malta, under

appropriate conditions;

(c)

the Authority;

(d)

the Central Bank; and

(e)

the Ministry responsible for Finance.

(7) This regulation shall be without prejudice to Maltese law

concerning the disclosure of information for the purpose of legal

proceedings in criminal or civil cases.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 85 Right to challenge decisions. — Recovery and Resolution Regulations, 2015 Open official source

Any decision taken by the Resolution Committee and, or

the Authority, as the case may be, shall be subject to an appeal by any

person aggrieved by that decision as provided for in the Act.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 86 Restrictions on other proceedings. — Recovery and Resolution Regulations, 2015 Open official source

(1) Without prejudice to regulation 82(2)(b), with

respect to an institution under resolution or an institution or an entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) in relation to which the conditions for resolution have

been determined to be met, normal insolvency proceedings shall not

be commenced except at the initiative of the Resolution Committee

and a decision placing an institution or an entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

into normal insolvency proceedings shall be taken only with the

consent of the Resolution Committee.

(2) For the purposes of sub-regulation (1)

(a)

the Authority and the Resolution Committee shall be

notified without delay of any application for the opening of

normal insolvency proceedings in relation to an institution or an

entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1), irrespective of whether the

institution or the entity referred to in paragraphs (b), (c) or (d) of

the definition "entity" in regulation 2(1) is under resolution or a

decision has been made public in accordance with regulation

83(4) and (5);

(b) the application shall not be determined unless the

notifications referred to in paragraph (a) have been made and

either of the following occurs

(i) the Resolution Committee has notified the

authorities responsible for normal insolvency proceedings

that it does not intend to take any resolution action in

relation to the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1);

(ii) a period of seven days beginning with the

date on which the notifications referred to in paragraph (a)

were made has expired.

(3) Without prejudice to any restriction on the enforcement of

security interests imposed pursuant to regulation 70, if necessary for

the effective application of the resolution tools and powers, the

Resolution Committee may request the First Hall of the Civil Court to

apply a stay for an appropriate period of time in accordance with the

objective pursued, on any judicial action or proceeding in which an

institution under resolution is or becomes a party

Provided that a decision granting the stay of proceedings

shall be final and shall not be subject to an appeal.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 87 — Recovery and Resolution Regulations, 2015 Open official source

When making decisions or taking action pursuant to these General

regulations, which may have an impact in one or more other Member principles

regarding

States, the Authority and the Resolution Committee shall have regard decision-making

involving more

to the following general principles

than one

Member State.

(a)

the imperatives of efficacy of decision-making and

of keeping resolution costs as low as possible when taking

resolution action;

(b) that decisions are made and action is taken in a

timely manner and with due urgency when required;

(c)

that the Resolution Committee, the Authority and

other relevant authorities cooperate with each other to ensure

that decisions are made and action is taken in a coordinated and

efficient manner;

(d) that the roles and responsibilities of the relevant

authorities are defined clearly;

(e)

that due consideration is given to the interests of the

Member States where the Union parent undertakings are

established, in particular the impact of any decision or action or

inaction on the financial stability, fiscal resources, resolution

fund, deposit guarantee scheme or investor compensation

scheme of those Member States;

(f)

that due consideration is given to the interests of

each individual Member State where a subsidiary is established,

in particular the impact of any decision or action or inaction on

the financial stability, fiscal resources, resolution fund, deposit

guarantee scheme or investor compensation scheme of those

Member States;

(g) that due consideration is given to the interests of

each Member State where significant branches are located, in

particular the impact of any decision or action or inaction on the

financial stability of those Member States;

(h) that due consideration is given to the objectives of

balancing the interests of the various Member States involved

and of avoiding unfairly prejudicing or unfairly protecting the

interests of particular Member States, including avoiding unfair

burden allocation across Member States;

(i)

that any obligation under these regulations to

consult an authority before any decision or action is taken

implies at least an obligation to consult that authority on those

elements of the proposed decision or action which have or

which are likely to have

(i) an effect on the Union parent undertaking, the

subsidiary or the branch; and

(ii) an impact on the stability of the Member

State where the Union parent undertaking, the subsidiary

or the branch, is established or located;

(j)

that the Resolution Committee, when taking

resolution actions, takes into account and follows the resolution

plans referred to in regulation 13 unless the Resolution

Committee considers, taking into account the circumstances of

the case, that the resolution objectives will be achieved more

effectively by taking actions which are not provided for in the

resolution plans;

(k) the requirement for transparency whenever a

proposed decision or action is likely to have implications on the

financial stability, fiscal resources, resolution fund, deposit

guarantee scheme or investor compensation scheme of any

relevant Member State; and

(l)

recognition that coordination and cooperation are

most likely to achieve a result which lowers the overall cost of

resolution.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 88 Resolution colleges. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee is the group-level

resolution authority, the Resolution Committee shall establish

resolution colleges to carry out the tasks referred to in regulations 12,

13, 16, 18, 45, 91 and 92, and, where appropriate, to ensure

cooperation and coordination with third-country resolution

authorities. In particular, resolution colleges shall provide a

framework for the Resolution Committee in its capacity as the group-

level resolution authority, the other European resolution authorities

and, where appropriate, the Authority, the other European regulatory

authorities concerned and the consolidating supervisor to perform the

following tasks

(a)

exchanging

information

relevant

for

the

development of group resolution plans, for the application to

groups of preparatory and preventative powers and for group

resolution;

(b) developing group resolution plans pursuant to

regulations 12 and 13;

(c)

assessing the resolvability of groups pursuant to

regulation 16;

(d) exercising powers to address or remove

impediments to the resolvability of groups pursuant to

regulation 18;

(e)

deciding on the need to establish a group resolution

scheme as referred to in regulation 91 or 92;

(f)

reaching the agreement on a group resolution

scheme proposed in accordance with regulation 91 or 92;

(g) coordinating public communication

of

group

resolution strategies and schemes;

(h) coordinating the use of financing arrangements

established under Title VII of the BRRD;

(i)

setting the minimum requirements for groups at

consolidated and subsidiary level under regulation 45

Provided that resolution colleges may be used as a forum

to discuss any issues relating to cross-border group resolution.

(2) The following shall be members of the resolution college

(a)

the Resolution Committee in its capacity as the

group-level resolution authority;

(b)

the European resolution authorities of each Member

State in which a subsidiary covered by consolidated supervision

is established;

(c)

the European resolution authorities where a parent

undertaking of one or more institutions of the group, that is an

entity referred to in paragraph (d) of the definition "entity" in

regulation 2(1), are established;

(d) the European resolution authorities in which

significant branches are located;

(e)

the consolidating supervisor, the Authority and the

European regulatory authorities of the Member States where the

European resolution authority is a member of the resolution

college

Provided that the Authority may decide to be

accompanied by a representative from the Central Bank

Provided further that where a European regulatory

authority is not the Member State’s central bank, such a

European regulatory authority may decide to be accompanied

by a representative from the Member State’s central bank;

(f)

the Ministry responsible for Finance and, where the

European resolution authorities which are members of the

resolution college are not the competent ministries, the

competent ministries;

(g) the authority that is responsible for the deposit

guarantee scheme, where the Resolution Committee is a

member of a resolution college;

(h)

the EBA

Provided that the EBA shall be invited to attend the

meetings of the resolution college in order to contribute to the

promotion and the monitoring of the efficient, effective and

consistent functioning of the resolution college

Provided further that to the extent that any voting

takes place within the framework of the resolution college, the

EBA shall not have any voting rights.

(3) The third-country resolution authorities where a parent

undertaking or an institution established in the European Union has a

subsidiary institution or a branch that would be considered to be

significant were it located in the European Union may, at their

request, be invited to participate in the resolution college as

observers, provided that they are subject to confidentiality

requirements equivalent, in the opinion of the Resolution Committee

in its capacity as group-level resolution authority, to those established

by regulation 98.

(4) The Resolution Committee in its capacity as the group-

level resolution authority shall be the chair of the resolution college.

In that capacity it shall

(a)

establish written arrangements and procedures for

the functioning of the resolution college, after consulting the

other members of the resolution college;

(b)

coordinate all activities of the resolution college;

(c)

convene and chair all its meetings and keep all

members of the resolution college fully informed in advance of

the organisation of meetings of the resolution college, of the

main issues to be discussed and of the items to be considered;

(d) notify the members of the resolution college of any

planned meetings so that they can request to participate;

(e)

decide which members and observers shall be

invited to attend particular meetings of the resolution college,

on the basis of specific needs, taking into account the relevance

of the issue to be discussed for those members and observers, in

particular the potential impact on financial stability in the

Member States concerned;

(f)

keep all of the members of the college informed, in a

timely manner, of the decisions and outcomes of those

meetings.

(5) The members participating in the resolution college shall

cooperate closely.

(6) The Resolution Committee in its capacity as the group-

level resolution authority is not obliged to establish a resolution

college if other groups or colleges perform the same functions and

carry out the same tasks specified in this regulation and comply with

all the conditions and procedures, including those covering

membership and participation in resolution colleges, established in

this regulation and in regulation 90. In such a case, all references to

resolution colleges in these regulations shall also be understood as

references to those other groups or colleges.

(7) Where the Resolution Committee is not a group-level

resolution authority and a European resolution authority acting as a

group-level resolution authority establishes a resolution college in

accordance with Article 88 of the BRRD, notwithstanding paragraph

(e) of Article 88(5) of the BRRD, the Resolution Committee shall be

entitled to participate in the meetings of such a resolution college

whenever matters subject to joint decision-making or relating to a

group entity located in Malta are on the agenda.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 89 European resolution colleges. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where a third country institution or third country

parent undertaking has Union subsidiaries established in Malta and at

least another Member State, or two or more Union branches that are

regarded as significant by Malta and at least another Member State,

the Resolution Committee together with the European resolution

authority of the Member States where those Union subsidiaries are

established or where those significant branches are located shall

establish a European resolution college.

(2) The European resolution college shall perform the

functions and carry out the tasks specified in regulation 88 with

respect to the subsidiary institutions and, in so far as those tasks are

relevant, to branches.

(3) Where the Union subsidiaries are held by, or the significant

branches are of, a financial holding company established within the

European Union in accordance with regulation 13(5) of the

Supervisory Consolidation Regulations, where the Authority is the

consolidating supervisor, the European resolution college shall be

chaired by the Resolution Committee

Provided that where the Union subsidiaries are held by, or

the significant branches are of, a financial holding company which is

not established within the European Union in accordance with the

third sub-paragraph of Article 127(3) of the CRD, the members of the

European resolution college shall nominate and agree the chair.

(4) Malta together with the other relevant Member States may,

by mutual agreement of all the relevant parties, waive the requirement

to establish a European resolution college if other groups or colleges,

including a resolution college established under Article 88 of the

BRRD, perform the same functions and carry out the same tasks

specified in this regulation and comply with all the conditions and

procedures, including those covering membership and participation in

European resolution colleges, established in Article 89 and Article 90

of the BRRD. In such a case, all references to European resolution

colleges in these regulations shall also be understood as references to

those other groups or colleges.

(5) Subject to sub-regulations (3) and (4), the European

resolution college shall otherwise function in accordance with

regulation 88.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 90 — Recovery and Resolution Regulations, 2015 Open official source

(1) Subject to regulation 84, the Resolution Committee Information

and the Authority shall provide one another, on request, with all the exchange.

information relevant for the exercise of the other authorities’ tasks

under these regulations.

(2) Where the Resolution Committee is the group-level

resolution authority, it shall coordinate the flow of all relevant

information between the Resolution Committee and the relevant

European resolution authorities. In particular, the Resolution

Committee shall provide the European resolution authorities with all

the relevant information in a timely manner with a view to facilitating

the exercise of the tasks referred to in regulation 88(1)(b) to (i).

(3) Upon a request for information which has been provided

by a third-country resolution authority, the Resolution Committee

shall seek the consent of the third-country resolution authority for the

onward transmission of that information, save where the third-

country resolution authority has already consented to the onward

transmission of that information

Provided that the Resolution Committee shall not be

obliged to transmit information provided from a third-country

resolution authority if the third-country resolution authority has not

consented to its onward transmission.

(4) The Resolution Committee shall share information with

the Ministry responsible for Finance when it relates to a decision or

matter which requires notification, consultation or consent of the

Ministry responsible for Finance or which may have implications for

public funds.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 91 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee decides that an Group

institution or any entity referred to in paragraphs (b), (c) or (d) of the resolution

involving a

definition "entity" in regulation 2(1) that is a subsidiary in a group subsidiary

group.

meets the conditions referred to in regulations 32 or 33, the

Resolution Committee shall notify the following information without

delay to the group-level resolution authority, if different, to the

consolidating supervisor, and to the members of the resolution college

for the group in question

(a)

the decision that the institution or entity referred to

in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) meets the conditions referred to in regulations

32 or 33;

(b) the resolution actions or insolvency measures that

the Resolution Committee considers to be appropriate for that

institution or that entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1).

(2) Where the Resolution Committee, in its capacity as the

group-level resolution authority, receives a notification in accordance

with Article 91(1) of the BRRD, after consulting the other members

of the relevant resolution college, it shall assess the likely impact of

the resolution actions or other measures notified in accordance with

paragraph (b) of Article 91(1) of the BRRD, on the group and on

group entities in other Member States, and, in particular, whether the

resolution actions or other measures would make it likely that the

conditions for resolution would be satisfied in relation to a group

entity in another Member State.

(3) If the Resolution Committee, in its capacity as the group-

level resolution authority, after consulting the other members of the

resolution college, assesses that the resolution actions or other

measures notified in accordance with paragraph (b) of Article 91(1)

of the BRRD, would not make it likely that the conditions laid down

in regulations 32 or 33 would be satisfied in relation to a group entity

in another Member State, the European resolution authority

responsible for that institution or that entity referred to in paragraphs

(b), (c) or (d) of the definition "entity" in regulation 2(1), may take

the resolution actions or other measures that it notified in accordance

with paragraph (b) of Article 91(1) of the BRRD.

(4) If the Resolution Committee, in its capacity as the group-

level resolution authority, after consulting the other members of the

resolution college, assesses that the resolution actions or other

measures notified in accordance with paragraph (b) of Article 91(1)

of the BRRD, would make it likely that the conditions laid down in

regulations 32 or 33 would be satisfied in relation to a group entity in

another Member State, the Resolution Committee in its capacity as

the group-level resolution authority shall, no later than 24 hours after

receiving the notification under Article 91(1) of the BRRD, propose a

group resolution scheme and submit it to the resolution college

Provided that the 24-hour period may be extended with the

consent of the European resolution authority which made the

notification referred to in Article 91(1) of the BRRD

Provided further that in the absence of an assessment by

the Resolution Committee in its capacity as the group-level resolution

authority within 24 hours, or a longer period that has been agreed,

after receiving the notification under Article 91(1) of the BRRD, the

European resolution authority which made the notification referred to

in Article 91(1) of the BRRD may take the resolution actions or other

measures that it notified in accordance with paragraph (b) of Article

91(1) of the BRRD.

(5) Where the Resolution Committee makes a notification in

accordance with sub-regulation (1), if the European resolution

authority acting as the group-level resolution authority, after

consulting the other members of the resolution college, assesses that

the resolution actions or other measures notified in accordance with

sub-regulation (1)(b), would not make it likely that the conditions laid

down in regulation 32 or 33 would be satisfied in relation to a group

entity in another Member State, the Resolution Committee may take

the resolution actions or other measures that it notified in accordance

with sub-regulation (1)(b)

Provided that in the absence of an assessment by the

European resolution authority acting as the group-level resolution

authority within twenty-four hours, or a longer period that has been

agreed in accordance with Article 91(4) of the BRRD, after receiving

the notification under sub-regulation (1), the Resolution Committee

may take the resolution actions or other measures that it notified in

accordance with sub-regulation (1)(b).

(6) A group resolution scheme required under sub-regulation

(4) shall

(a)

take into account and follow the resolution plans as

referred to in regulation 13 unless the Resolution Committee

and the relevant European resolution authorities assess, taking

into account circumstances of the case, that resolution

objectives will be achieved more effectively by taking actions

which are not provided for in the resolution plans;

(b) outline the resolution actions that should be taken by

the Resolution Committee and the relevant European resolution

authorities in relation to the Union parent undertaking or

particular group entities with the aim of meeting the resolution

objectives and principles referred to in regulations 31 and 34;

(c)

specify how those resolution actions should be

coordinated;

(d) establish a financing plan which takes into account

the group resolution plan, principles for sharing responsibility

as established in accordance with regulation 12(3)(f) and the

mutualisation as referred to in regulation 107.

(7) Subject to sub-regulation (8), the group resolution scheme

shall, where the Resolution Committee is the group-level resolution

authority, take the form of a joint decision of the Resolution

Committee and the European resolution authorities responsible for

the subsidiaries that are covered by the group resolution scheme, and

where the Resolution Committee is responsible for a subsidiary that is

covered by the group resolution scheme, take the form of a joint

decision of the Resolution Committee, the European resolution

authority acting as the group-level resolution authority and the

relevant European resolution authorities responsible for other

subsidiaries that are covered by the group resolution scheme, if any

Provided that the Resolution Committee may request the

EBA to assist the authorities mentioned in this sub-regulation in

reaching a joint decision in accordance with Article 31(c) of

Regulation (EU No 1093/2010.

(8) If the Resolution Committee disagrees with or departs

from the group resolution scheme proposed by the group-level

resolution authority or considers that it needs to take independent

resolution actions or measures other than those proposed in the

scheme in relation to an institution or an entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

for reasons of financial stability, it shall set out in detail the reasons

for the disagreement or the reasons to depart from the group

resolution scheme, notify the group-level resolution authority and the

other European resolution authorities that are covered by the group

resolution scheme of the reasons and inform them about the actions or

measures it will take. When setting out the reasons for its

disagreement, the Resolution Committee shall take into consideration

the resolution plans as referred to in regulation 13, the potential

impact on financial stability in the Member States concerned as well

as the potential effect of the actions or measures on other parts of the

group.

(9) If the Resolution Committee does not disagree in

accordance with sub-regulation (8), it may, together with any relevant

European resolution authorities which do not disagree in accordance

with Article 91(8) of the BRRD, reach a joint decision on a group

resolution scheme covering group entities in Malta and in the relevant

Member States.

(10) The joint decision referred to in sub-regulations (7) or (9)

and any decisions taken by the European resolution authorities in the

absence of a joint decision referred to in Article 91(8) of the BRRD

shall be recognised as conclusive and applied by the Resolution

Committee in Malta.

(11) The Resolution Committee shall perform all actions under

this regulation without delay, and with due regard to the urgency of

the situation.

(12) In any case where a group resolution scheme is not

implemented and the Resolution Committee takes resolution actions

in relation to any group entity, the Resolution Committee shall

cooperate closely with the relevant European resolution authorities

within the resolution college with a view to achieving a coordinated

resolution strategy for all the group entities that are failing or likely to

fail.

(13) If the Resolution Committee takes any resolution action in

relation to any group entity, it shall inform the members of the

resolution college regularly and fully about those actions or measures

and their on-going progress.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 92 — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee in its capacity as Group

the group-level resolution authority decides that a Union parent resolution.

undertaking for which it is responsible meets the conditions referred

to in regulations 32 or 33 it shall notify the information referred to in

regulation 91(1)(a) and (b) without delay to the consolidating

supervisor, if different, and to the other members of the resolution

college of the group in question.

(2) The resolution actions or insolvency measures for the

purposes of regulation 91(1)(b) may include the implementation of a

group resolution scheme drawn up in accordance with regulation

91(6) in any of the following circumstances

(a)

resolution actions or other measures at parent level

notified in accordance with regulation 91(1)(b) make it likely

that the conditions laid down in regulations 32 or 33 would be

fulfilled in relation to a group entity in another Member State;

(b) resolution actions or other measures at parent level

only are not sufficient to stabilise the situation or are not likely

to provide an optimum outcome;

(c)

one or more subsidiaries meet the conditions

referred to in regulations 32 or 33 according to a determination

by the European resolution authorities responsible for those

subsidiaries; or

(d) resolution actions or other measures at group level

will benefit the subsidiaries of the group in a way which makes

a group resolution scheme appropriate.

(3) Where the actions proposed by the Resolution Committee,

in its capacity as the group-level resolution authority, under sub-

regulations (1) and (2) do not include a group resolution scheme, the

Resolution Committee in its capacity as the group-level resolution

authority shall take its decision after consulting the members of the

resolution college

Provided that the decision of the group-level resolution

authority shall take into account

(a)

and follow the resolution plans as referred to in

regulation 13 unless the Resolution Committee and the

European resolution authorities concerned assesses, taking into

account circumstances of the case, that the resolution objectives

will be achieved more effectively by taking actions which are

not provided for in the resolution plans;

(b) the financial stability of Malta and of the Member

States concerned.

(4) Where the actions proposed by the Resolution Committee,

in its capacity as the group-level resolution authority, under sub-

regulation (1) include a group resolution scheme, the group resolution

scheme shall take the form of a joint decision of the Resolution

Committee, in its capacity as the group-level resolution authority, and

the European resolution authorities responsible for the subsidiaries

that are covered by the group resolution scheme

Provided that where the Resolution Committee is

responsible for a subsidiary that is covered by a group resolution

scheme, and the action proposed by a European resolution authority

acting as the group-level resolution authority in accordance with

Article 92(1) of the BRRD includes a group resolution scheme, the

group resolution scheme shall take the form of a joint decision of the

Resolution Committee, the European resolution authority acting as

the group-level resolution authority and the European resolution

authority responsible for the other subsidiaries that are covered by the

group resolution scheme, if any

Provided further that the Resolution Committee may

request the EBA to assist the authorities mentioned in this sub-

regulation in reaching a joint decision in accordance with Article

31(c) of Regulation (EU) No 1093/2010.

(5) Where the Resolution Committee is responsible for a

subsidiary that is covered by a group resolution scheme, if the

Resolution Committee disagrees with or departs from the group

resolution scheme proposed by the European resolution authority

acting as the group-level resolution authority or considers that it

needs to take independent resolution actions or measures other than

those proposed in the scheme in relation to an institution or entity

referred to in paragraphs (b), (c) or (d) of the definition "entity" in

regulation 2(1) for reasons of financial stability, it shall set out in

detail the reasons for the disagreement or the reasons to depart from

the group resolution scheme, notify the European resolution authority

acting as the group-level resolution authority and the relevant

European resolution authorities that are covered by the group

resolution scheme of the reasons and inform them about the actions or

measures it intends to take

Provided that when setting out the reasons for its

disagreement, the Resolution Committee shall give consideration to

the resolution plans as referred to in regulation 13, the potential

impact on financial stability in Malta and in the Member States

concerned as well as the potential effect of the actions or measures on

other parts of the group.

(6) Where the Resolution Committee is responsible for a

subsidiary that is covered by a group resolution scheme and the

Resolution Committee does not disagree with the group resolution

scheme under sub-regulation (5), it may, together with any European

resolution authorities which do not disagree with the group resolution

scheme under Article 92(4) of the BRRD, reach a joint decision on a

group resolution scheme covering group entities in Malta and in the

relevant Member States.

(7) The joint decision referred to in sub-regulations (4) or (6)

and any decisions taken by the European resolution authorities in the

absence of a joint decision referred to in Article 92(4) of the BRRD

shall be recognised as conclusive and applied by the Resolution

Committee in Malta.

(8) The Resolution Committee shall perform all actions under

this regulation without delay, and with due regard to the urgency of

the situation

Provided that, where a group resolution scheme is not

implemented and the Resolution Committee takes a resolution action

in relation to any group entity, the Resolution Committee shall co-

operate closely with the relevant European resolution authorities

within the resolution college with a view to achieving a coordinated

resolution strategy for all affected group entities

Provided further that where the Resolution Committee

takes a resolution action in relation to any group entity, it shall inform

the members of the resolution college regularly and fully about those

actions or measures and their on-going progress.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 93 Agreements with third countries. — Recovery and Resolution Regulations, 2015 Open official source

The Resolution Committee may enter into bilateral

agreements with third countries with regard to the following

situations

(a)

in cases where a third country parent undertaking

has subsidiary institutions or branches authorised in Malta,

where such branches are regarded as significant in two or more

Member States;

(b) in cases where a parent undertaking established in

Malta and which has a subsidiary or a significant branch in at

least one other Member State, also has one or more third

country subsidiary institutions;

(c)

in cases where an institution established in Malta

and which has a parent undertaking, a subsidiary or a significant

branch in at least one other Member State has one or more

branches in one or more third countries

Provided that such bilateral agreements shall seek to

ensure the establishment of processes and arrangements between the

Resolution Committee and the relevant third country authorities for

cooperation in carrying out some or all of the tasks and exercising

some or all of the powers indicated in regulation 97

Provided further that such bilateral agreements with a third

country shall remain in force only until the entry into force of an

agreement referred to in Article 93(1) of the BRRD with the relevant

third country to the extent that such bilateral agreements are not

inconsistent with Title VI of the BRRD.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 94 Recognition and enforcement of third-country resolution proceedings. — Recovery and Resolution Regulations, 2015 Open official source

(1) This regulation shall apply in respect of third-

country resolution proceedings unless and until an international

agreement as referred to in Article 93(1) of the BRRD enters into

force with the relevant third country. It shall also apply following the

entry into force of an international agreement as referred to in the

second proviso of regulation 93 with the relevant third country to the

extent that recognition and enforcement of third-country resolution

proceedings is not governed by that agreement.

(2) Where there is a European resolution college established in

accordance with regulation 89, the Resolution Committee shall,

together with the relevant European resolution authorities, take a joint

decision on whether to recognise, except as provided for in regulation

95, third-country resolution proceedings relating to a third-country

institution or a parent undertaking that

(a)

has Union subsidiaries established in, or Union

branches located in and regarded as significant by, two or more

Member States; or

(b) has assets, rights or liabilities located in two or more

Member States or are governed by the law of those Member

States

Provided that, where the European resolution college

reaches a joint decision on the recognition of the third-country

resolution proceedings, the Resolution Committee shall seek the

enforcement of the recognised third-country resolution proceedings.

(3) In the absence of a joint decision of the European

resolution college, or in the absence of a European resolution college,

the Resolution Committee, where relevant, shall make its own

decision on whether to recognise and enforce, except as provided for

in regulation 95, third-country resolution proceedings relating to a

third-country institution or a parent undertaking

Provided that the decision shall give due consideration to

the interests of Malta where a third-country institution or parent

undertaking operates, and in particular to the potential impact of the

recognition and enforcement of the third-country resolution

proceedings on the other parts of the group and the financial stability

in those Member States.

(4) The Resolution Committee shall be empowered, as a

minimum, to do the following

(a)

exercise the resolution powers in relation to the

following

(i) assets of a third-country institution or parent

undertaking that are located in Malta or governed by the

laws of Malta;

(ii) rights or liabilities of a third-country

institution that are booked by the Union branch in Malta or

governed by the laws of Malta, or where claims in relation

to such rights and liabilities are enforceable in Malta;

(b) perfect, including to require another person to take

action to perfect, a transfer of shares or other instruments of

ownership in a Union subsidiary established in Malta;

(c)

exercise the powers in regulations 69, 70 or 71 in

relation to the rights of any party to a contract with an entity

referred to in sub-regulation (2), where such powers are

necessary in order to enforce third-country resolution

proceedings; and

(d) render unenforceable any right to terminate,

liquidate or accelerate contracts, or affect the contractual rights,

of entities referred to in sub-regulation (2) and other group

entities, where such a right arises from resolution action taken

in respect of the third-country institution, parent undertaking of

such entities or other group entities, whether by the third-

country resolution authority itself or otherwise pursuant to legal

or regulatory requirements as to resolution arrangements in that

country, provided that the substantive obligations under the

contract, including payment and delivery obligations, and

provision of collateral, continue to be performed.

(5) The Resolution Committee may take, where necessary in

the public interest, resolution action with respect to a parent

undertaking where the relevant third-country authority determines

that an institution that is incorporated in that third country meets the

conditions for resolution under the law of that third country. To that

end, the Resolution Committee may use any resolution power in

respect of that parent undertaking, and regulation 68 shall apply.

(6) The recognition and enforcement of third-country

resolution proceedings shall be without prejudice to any normal

insolvency proceedings under Maltese law applicable, where

appropriate, in accordance with these regulations.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 95 Right to refuse recognition or enforcement of third-country resolution proceedings. — Recovery and Resolution Regulations, 2015 Open official source

The Resolution Committee, after consulting European

resolution authorities, where a European resolution college is

established under regulation 89, may refuse to recognise or to enforce

third-country resolution proceedings pursuant to regulation 94(2) if it

considers

(a)

that the third-country resolution proceedings would

have adverse effects on the financial stability in Malta or that

the proceedings would have adverse effects on financial

stability in another Member State;

(b) that independent resolution action under regulation

96 in relation to a Union branch is necessary to achieve one or

more of the resolution objectives;

(c)

that creditors, including in particular depositors

located or payable in Malta or in another Member State, would

not receive the same treatment as third-country creditors and

depositors with similar legal rights under the third-country

home resolution proceedings;

(d) that recognition or enforcement of the third-country

resolution proceedings would have material fiscal implications

for Malta; or

(e)

that the effects of such recognition or enforcement

would be contrary to Maltese law.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 96 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee shall have the power to Resolution of

act in relation to a Union branch that is not subject to any third- Union branches.

country resolution proceedings or that is subject to third-country

proceedings and one of the circumstances referred to in regulation 95

applies

Provided that regulation 68 shall apply in the exercise of

such powers.

(2) The powers required in sub-regulation (1) may be

exercised by the Resolution Committee where it considers that action

is necessary in the public interest and one or more of the following

conditions are met

(a)

the Union branch no longer meets, or is likely not to

meet, the conditions imposed by Maltese law for obtaining its

licence and operation within Malta and there is no prospect that

any private sector, supervisory or relevant third-country action

would restore the branch to compliance or prevent failure in a

reasonable time-frame;

(b) the third-country institution is, in the opinion of the

Resolution Committee, unable or unwilling, or is likely to be

unable, to pay its obligations to Union creditors, or obligations

that have been created or booked through the branch, as they fall

due and the Resolution Committee is satisfied that no third-

country resolution proceedings or insolvency proceedings have

been or will be initiated in relation to that third-country

institution in a reasonable time-frame;

(c)

the relevant third-country authority has initiated

third-country resolution proceedings in relation to the third-

country institution, or has notified to the Resolution Committee

its intention to initiate such a proceeding.

(3) Where the Resolution Committee takes an independent

action in relation to a Union branch, it shall have regard to the

resolution objectives and take the action in accordance with the

following principles and requirements, insofar as they are relevant

(a)

the principles set out in regulation 34;

(b) the requirements relating to the application of the

resolution tools in regulation 36.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 97 Cooperation with third- country authorities. — Recovery and Resolution Regulations, 2015 Open official source

(1) This regulation shall apply in respect of cooperation

with a third country unless and until an international agreement as

referred to in Article 93(1) of the BRRD enters into force with the

relevant third country. It shall also apply following the entry into

force of an international agreement provided for in Article 93(1) of

the BRRD with the relevant third country to the extent that the subject

matter of this regulation is not governed by that agreement.

(2) The Authority or the Resolution Committee, where

appropriate, shall conclude non-binding cooperation arrangements in

line with the EBA framework arrangement with the relevant third-

country authorities indicated in Article 97(2) of the BRRD

Provided that this regulation shall not prevent the

Authority from concluding bilateral or multilateral arrangements with

third countries, in accordance with Article 33 of Regulation (EU) No

1093/2010.

(3) Cooperation arrangements concluded between the

Resolution Committee and third countries in accordance with this

regulation may include provisions on the following matters

(a)

the exchange of information necessary for the

preparation and maintenance of resolution plans;

(b) consultation and cooperation in the development of

resolution plans, including principles for the exercise of powers

under regulations 94 and 96 and similar powers under the law of

the relevant third countries;

(c)

the exchange of information necessary for the

application of resolution tools and exercise of resolution powers

and similar powers under the law of the relevant third countries;

(d) early warning to or consultation of parties to the

cooperation arrangement before taking any significant action

under these regulations or relevant third-country law affecting

the institution or group to which the arrangement relates;

(e)

the coordination of public communication in the

case of joint resolution actions;

(f)

procedures and arrangements for the exchange of

information and cooperation under paragraphs (a) to (e),

including, where appropriate, through the establishment and

operation of crisis management groups.

(4) The Resolution Committee and the Authority shall notify

the EBA of any cooperation arrangements concluded in accordance

with this regulation.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 98 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Resolution Committee, the Authority and the Exchange of

Ministry responsible for Finance shall exchange confidential confidential

information.

information, including recovery plans, with relevant third-country

authorities only if the following conditions are met

(a)

those third-country authorities are subject to

requirements and standards of professional secrecy at least

considered to be equivalent, in the opinion of all the authorities

concerned, to those imposed by regulation 84

Provided that in so far as the exchange of

information relates to personal data, the handling and

transmission of such personal data to third-country authorities

shall be governed by the applicable Union and Maltese data

protection law;

(b) the information is necessary for the performance by

the relevant third-country authorities of their resolution

functions under their national law that are comparable to those

under these regulations and, subject to paragraph (a), is not used

for any other purposes.

(2) Where confidential information originates in another

Member State, the Resolution Committee, the Authority and the

Ministry responsible for Finance shall not disclose that information to

relevant third-country authorities unless the following conditions are

met

(a)

the relevant authority of the Member State where the

information originated (the originating authority) agrees to that

disclosure;

(b) the information is disclosed only for the purposes

permitted by the originating authority.

(3) For the purposes of this regulation, information is deemed

to be confidential if it is subject to confidentiality requirements under

Union law.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 99 European system of financing arrangements. — Recovery and Resolution Regulations, 2015 Open official source

A European system of financing arrangements shall be

established and shall consist of

(a)

national financing arrangements established in

accordance with regulation 100;

(b) the borrowing between national

financing

arrangements as specified in regulation 106;

(c)

the

mutualisation

of

national

financing

arrangements in the case of a group resolution as referred to in

regulation 107.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 100 Requirement to establish resolution financing arrangements. — Recovery and Resolution Regulations, 2015 Open official source

(1) One or more financing arrangements shall be

established for the purpose of ensuring the effective application by

the Resolution Committee of the resolution tools and powers

Provided that the use of the financing arrangements may be

triggered by a designated public authority or authority entrusted with

public administrative powers

Provided further that the financing arrangements shall be

used only in accordance with the resolution objectives and the

principles set out in regulations 31 and 34.

(2) The same administrative structure may be used as the

financing arrangements for the purposes of the deposit guarantee

scheme.

(3) Financing arrangements shall have adequate financial

resources.

(4) For the purpose of sub-regulation

(3),

financing

arrangements shall in particular have the power to

(a)

raise ex-ante contributions as referred to in

regulation 103 with a view to reaching the target level specified

in regulation 102;

(b) raise ex-post extraordinary contributions as referred

to in regulation 104 where the contributions specified in

paragraph (a) are insufficient; and

(c)

contract borrowings and other forms of support as

referred to in regulation 105.

(5) Save where permitted under sub-regulation (6), the

financing arrangements shall be established through a fund, the use of

which may be triggered by the Resolution Committee for the

purposes set out in regulation 101(1).

(6) Notwithstanding sub-regulation (5), for the purpose of

fulfilling the obligations under sub-regulation (1), financing

arrangements may be established through mandatory contributions

from institutions which are authorised in its territory, which

contributions are based on the criteria referred to in Article 103(7) of

the BRRD and which are not held through a fund controlled by the

Resolution Committee provided that all of the following conditions

are met

(a)

the amount raised by contributions is at least equal

to the amount that is required to be raised under regulation 102;

(b) the Resolution Committee is entitled to an amount

that is equal to the amount of such contributions, which shall be

made immediately available to the Resolution Committee upon

the latter’s request, for use exclusively for the purposes set out

in regulation 101;

(c)

the Resolution Committee notifies the European

Commission of its decision to avail itself of the discretion to

structure its financing arrangements in accordance with this

sub-regulation;

(d) the Resolution Committee notifies the European

Commission of the amount referred to in paragraph (b) at least

annually; and

(e)

save as laid down in this sub-regulation, the

financing arrangements comply with regulations 99 to 102,

regulations 103(1) to (4) and (6) and regulations 104 to 109

Provided that for the purposes of this sub-regulation, the

available financial means to be taken into account in order to reach

the target level specified in regulation 102 may include mandatory

contributions from any scheme of mandatory contributions

established at any date between 17 June 2010 and 2 July 2014 from

institutions licensed in Malta for the purposes of covering the costs

relating to systemic risk, failure and resolution of institutions,

provided that the Resolution Committee complies with regulations 99

to 109. Contributions to deposit guarantee schemes shall not count

towards the target level for resolution financing arrangements set out

in regulation 102.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 101 Use of the resolution financing arrangements. — Recovery and Resolution Regulations, 2015 Open official source

(1) The financing arrangements established in

accordance with regulation 100 may be used by the Resolution

Committee only to the extent necessary to ensure the effective

application of the resolution tools, for the following purposes

(a)

to guarantee the assets or the liabilities of the

institution under resolution, its subsidiaries, a bridge institution

or an asset management vehicle;

(b) to make loans to the institution under resolution, its

subsidiaries, a bridge institution or an asset management

vehicle;

(c)

to purchase assets of the institution under resolution;

(d) to make contributions to a bridge institution and an

asset management vehicle;

(e)

to pay compensation to shareholders or creditors in

accordance with regulation 75;

(f)

to make a contribution to the institution under

resolution in lieu of the write down or conversion of liabilities

of certain creditors, when the bail-in tool is applied and the

Resolution Committee decides to exclude certain creditors from

the scope of bail-in in accordance with regulation 44(3) to (8);

(g) to lend to other financing arrangements on a

voluntary basis in accordance with regulation 106;

(h) to take any combination of the actions referred to in

paragraphs (a) to (g)

Provided that the financing arrangements may be used to

take the actions referred to in this sub-regulation also with respect to

the purchaser in the context of the sale of business tool.

(2) The resolution financing arrangement shall not be used

directly to absorb the losses of an institution or an entity referred to in

paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1)

or to recapitalise such an institution or an entity. In the event that the

use of the resolution financing arrangement for the purposes of sub-

regulation (1) indirectly results in part of the losses of an institution

or an entity referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) being passed on to the resolution financing

arrangement, the principles governing the use of the resolution

financing arrangement set out in regulation 44 shall apply.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 102 — Recovery and Resolution Regulations, 2015 Open official source

(1) The financial means of Malta’s financing Target level.

arrangements must, by 31 December 2024, reach at least 1% of the

amount of covered deposits of all the institutions authorised in Malta.

(2) During the initial period of time referred to in sub-

regulation (1), contributions to the financing arrangements raised in

accordance with regulation 103 shall be spread out in time as evenly

as possible until the target level is reached, but with due account of

the phase of the business cycle and the impact pro-cyclical

contributions may have on the financial position of contributing

institutions

Provided that the initial period of time may be extended for

a maximum of four years if the financing arrangements have made

cumulative disbursements in excess of 0.5% of covered deposits of all

the institutions licensed in Malta which are guaranteed under

Directive 2014/49/EU.

(3) If, after the initial period of time referred to in sub-

regulation (1), the available financial means diminish below the target

level specified in that sub-regulation, the regular contributions raised

in accordance with regulation 103 shall resume until the target level is

reached. After the target level has been reached for the first time and

where the available financial means have subsequently been reduced

to less than two thirds of the target level, those contributions shall be

set at a level allowing for reaching the target level within six years.

The regular contribution shall take due account of the phase of the

business cycle, and the impact procyclical contributions may have

when setting annual contributions in the context of this sub-

regulation.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 103 — Recovery and Resolution Regulations, 2015 Open official source

(1) In order to reach the target level specified in Ex-ante

regulation 102, contributions shall be raised at least annually from the contributions.

institutions licensed in Malta including Union branches.

(2) The contribution of each institution shall be pro rata to the

amount of its liabilities (excluding own funds) less covered deposits,

with respect to the aggregate liabilities (excluding own funds) less

covered deposits of all the institutions licenced in Malta

Provided that those contributions shall be adjusted in

proportion to the risk profile of institutions, in accordance with the

criteria adopted under Article 103(7) of the BRRD.

(3) The available financial means to be taken into account in

order to reach the target level specified in regulation 102 may include

irrevocable payment commitments which are fully backed by

collateral of low risk assets unencumbered by any third party rights,

at the free disposal and earmarked for the exclusive use by the

Resolution Committee for the purposes specified in regulation

101(1). The share of irrevocable payment commitments shall not

exceed 30% of the total amount of contributions raised in accordance

with this regulation.

(4) The obligation to pay the contributions specified in this

regulation is enforceable under Maltese law, and due contributions

shall be fully paid. Appropriate regulatory, accounting, reporting and

other obligations shall be set up to ensure that due contributions are

fully paid. There shall be measures for the proper verification of

whether the contributions have been paid correctly, which measures

shall prevent evasion, avoidance and abuse.

(5) The amounts raised in accordance with this regulation

shall only be used for the purposes specified in regulation 101(1).

(6) Subject to regulations 37, 38, 40, 41 and 42, the amounts

received from the institution under resolution or the bridge

institution, the interest and other earnings on investments and any

other earnings may benefit the financing arrangements.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 104 Extraordinary ex-post contributions. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the available financial means are not

sufficient to cover the losses, costs or other expenses incurred by the

use of the financing arrangements, extraordinary ex-post

contributions shall be raised from the institutions licensed in Malta, in

order to cover the additional amounts. Those extraordinary ex-post

contributions shall be allocated between institutions in accordance

with the rules laid down in regulation 103(2)

Provided that extraordinary ex-post contributions shall not

exceed three times the annual amount of contributions determined in

accordance with regulation 103.

(2) Regulations 103(4) to (6) and Article 103(7) and (8) of the

BRRD shall be applicable to the contributions raised under this

regulation.

(3) The Resolution Committee may defer, in whole or in part,

an institution’s payment of extraordinary ex-post contributions to the

resolution financing arrangement if the payment of those

contributions would jeopardise the liquidity or solvency of the

institution. Such a deferral shall not be granted for a period of longer

than six months but may be renewed upon the request of the

institution. The contributions deferred pursuant to this sub-regulation

shall be paid when such a payment no longer jeopardises the

institution’s liquidity or solvency.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 105 — Recovery and Resolution Regulations, 2015 Open official source

Financing arrangements shall be enabled to contract Alternative

borrowings or other forms of support from institutions, financial funding means.

institutions or other third parties in the event that the amounts raised

in accordance with regulation 103 are not sufficient to cover the

losses, costs or other expenses incurred by the use of the financing

arrangements, and the extraordinary ex-post contributions provided

for in regulation 104 are not immediately accessible or sufficient.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 106 — Recovery and Resolution Regulations, 2015 Open official source

(1) Financing arrangements may make a request to Borrowing

borrow from all other financing arrangements within the European between

financing

arrangements.

Union, in the event that

(a)

the amounts raised under regulation 103 are not

sufficient to cover the losses, costs or other expenses incurred

by the use of the financing arrangements;

(b) the extraordinary ex-post contributions provided for

in regulation 104 are not immediately accessible; and

(c)

the alternative funding means provided for in

regulation 105 are not immediately accessible on reasonable

terms.

(2) Financing arrangements shall have the power to lend to

other financing arrangements within the European Union in the

circumstances specified in sub-regulation (1).

(3) Following a request under Article 106(1) of the BRRD, the

financing arrangement in Malta shall decide whether to lend to the

financing arrangement which has made the request. The decision

shall be taken after consulting or with the consent of, the Ministry

responsible for Finance. The decision shall be taken with due

urgency.

(4) The rate of interest, repayment period and other terms and

conditions of the loans shall be agreed between the borrowing

financing arrangement and the other financing arrangements which

have decided to participate. The loan of every participating financing

arrangement shall have the same interest rate, repayment period and

other terms and conditions, unless all participating financing

arrangements agree otherwise.

(5) The amount lent by the resolution financing arrangement

shall be pro rata to the amount of covered deposits in Malta, with

respect to the aggregate of covered deposits in Malta. The rates of

contribution may vary upon agreement of the resolution financing

arrangement with the other participating financing arrangements.

(6) An outstanding loan to the resolution financing

arrangement of another Member State under this regulation shall be

treated as an asset of the resolution financing arrangement in Malta

and may be counted towards that financing arrangement’s target

level.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 107 Mutualisation of national financing arrangements in the case of a group resolution. — Recovery and Resolution Regulations, 2015 Open official source

(1) In the case of a group resolution as referred to in

regulation 91 or regulation 92, the resolution financing arrangement

of each institution established in Malta that is part of a group shall

contribute to the financing of the group resolution in accordance with

this regulation.

(2) For the purposes of sub-regulation (1), where the

Resolution Committee is the group-level resolution authority, it shall,

after consulting the European resolution authorities of the institutions

that are part of the group, propose, if necessary before taking any

resolution action, a financing plan as part of the group resolution

scheme provided for in regulations 91 and 92

Provided that the financing plan shall be agreed in

accordance with the decision-making procedure referred to in

regulations 91 and 92.

(3) The financing plan shall include

(a)

a valuation in accordance with regulation 36 in

respect of the affected group entities;

(b) the losses to be recognised by each affected group

entity at the moment the resolution tools are exercised;

(c)

for each affected group entity, the losses that would

be suffered by each class of shareholders and creditors;

(d) any contribution that deposit guarantee schemes

would be required to make in accordance with regulation 109(1)

and (2);

(e)

the total contribution by resolution financing

arrangements and the purpose and form of the contribution;

(f)

where an affected group entity is located in Malta,

the basis for calculating the amount that the financing

arrangement is required to contribute to the financing of the

group resolution in order to build up the total contribution

referred to in paragraph (e);

(g)

where an affected group entity is located in Malta,

the amount that the financing arrangement is required to

contribute to the financing of the group resolution and the form

of those contributions;

(h) where an affected group entity is located in Malta,

the amount of borrowing that the financing arrangements will

contract from institutions, financial institutions and other third

parties under regulation 105;

(i)

where an affected group entity is located in Malta, a

timeframe for the use of the financing arrangement which

should be capable of being extended where appropriate.

(4) The basis for apportioning the contribution referred to in

sub-regulation (3)(e) shall be consistent with sub-regulation (5) and

with the principles set out in the group resolution plan in accordance

with regulation 12(3)(f), unless otherwise agreed in the financing

plan.

(5) Unless agreed otherwise in the financing plan, the basis for

calculating the contribution of a financing arrangement in Malta shall

in particular have regard to

(a)

the proportion of the group’s risk-weighted assets

held at institutions and entities referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) established in

Malta;

(b) the proportion of the group’s assets held at

institutions and entities referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1) established in Malta;

(c)

the proportion of the losses, which have given rise to

the need for group resolution, which originated in group entities

under the supervision of the Authority; and

(d) the proportion of the resources of the group

financing arrangements which, under the financing plan, are

expected to be used to benefit group entities established in

Malta.

(6) The Resolution Committee shall establish rules and

procedures in advance to ensure that each financing arrangement in

Malta can affect its contribution to the financing of group resolution

immediately without prejudice to sub-regulation (2).

(7) For the purposes of these regulations, group financing

arrangements, under the conditions laid down in regulation 105, shall

be allowed to contract borrowings or other forms of support, from

institutions, financial institutions or other third parties.

(8) Financing arrangements may guarantee any borrowing

contracted by the group financing arrangements in accordance with

sub-regulation (7).

(9) Any proceeds or benefits that arise from the use of the

group financing arrangements shall be allocated to Malta’s financing

arrangements in accordance with Malta’s contributions to the

financing of the resolution as established in sub-regulation (2).

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 108 Ranking of deposits in insolvency hierarchy. — Recovery and Resolution Regulations, 2015 Open official source

In normal insolvency proceedings

(a)

the following have the same priority ranking which

is higher than the ranking provided for the claims of ordinary

unsecured, non-preferred creditors

(i) that part of eligible deposits from natural

persons and micro, small and medium-sized enterprises

which exceeds the coverage level provided for in Article 6

of Directive 2014/49/EU;

(ii) deposits that would be eligible deposits from

natural persons, micro, small and medium-sized

enterprises were they not made through branches located

outside the European Union of institutions established

within the European Union;

(b) the following have the same priority ranking which

is higher than the ranking provided for under paragraph (a)

(i)

covered deposits;

(ii) deposit guarantee schemes subrogating to the

rights and obligations of covered depositors in insolvency.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 109 Use of deposit guarantee schemes in the context of resolution. — Recovery and Resolution Regulations, 2015 Open official source

(1) Where the Resolution Committee takes a resolution

action, and provided that that action ensures that depositors continue

to have access to their deposits, the deposit guarantee scheme to

which the institution is affiliated is liable for

(a)

when the bail-in tool is applied, the amount by

which covered deposits would have been written down in order

to absorb the losses in the institution pursuant to regulation

46(1)(a), had covered deposits been included within the scope

of bail-in and been written down to the same extent as creditors

with the same level of priority under normal insolvency

proceedings; or

(b) when one or more resolution tools other than the

bail-in tool is applied, the amount of losses that covered

depositors would have suffered, had covered depositors suffered

losses in proportion to the losses suffered by creditors with the

same level of priority under normal insolvency proceedings.

(2) In all cases, the liability of the deposit guarantee scheme

shall not be greater than the amount of losses that it would have had

to bear had the institution been wound up under normal insolvency

proceedings

Provided that when the bail-in tool is applied, the deposit

guarantee scheme shall not be required to make any contribution

towards the costs of recapitalising the institution or bridge institution

pursuant to regulation 46(1)(b)

Provided further that where it is determined by a valuation

under regulation 74 that the deposit guarantee scheme’s contribution

to resolution was greater than the net losses it would have incurred

had the institution been wound up under normal insolvency

proceedings, the deposit guarantee scheme shall be entitled to the

payment of the difference from the resolution financing arrangement

in accordance with regulation 75.

(3) The determination of the amount by which the deposit

guarantee scheme is liable in accordance with sub-regulation (1) shall

comply with the conditions referred to in regulation 36.

(4) The contribution from the deposit guarantee scheme for the

purpose of sub-regulation (1) shall be made in cash.

(5) Where eligible deposits at an institution under resolution

are transferred to another entity through the sale of business tool or

the bridge institution tool, the depositors have no claim under

Directive 2014/49/EU against the deposit guarantee scheme in

relation to any part of their deposits at the institution under resolution

that are not transferred, provided that the amount of funds transferred

is equal to or more than the aggregate coverage level provided for in

Article 6 of Directive 2014/49/EU.

(6) Notwithstanding sub-regulations (1) to (5), if the available

financial means of a deposit guarantee scheme are used in accordance

therewith and are subsequently reduced to less than two thirds of the

target level of the deposit guarantee scheme, the regular contribution

to the deposit guarantee scheme shall be set at a level allowing for

reaching the target level within six years

Provided that in all cases, the liability of a deposit

guarantee scheme shall not be greater than the amount equal to 50 %

of its target level pursuant to Article 10 of Directive 2014/49/EU. The

Resolution Committee, may, by taking into account the specificities

of their national banking sector, set a percentage which is higher than

50%

Provided further that in any circumstances, the deposit

guarantee scheme’s participation under these regulations shall not

exceed the losses it would have incurred in a winding up under

normal insolvency proceedings.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 110 Offences. — Recovery and Resolution Regulations, 2015 Open official source

(1)

Any person who -

(a)

fails to comply with any directive issued by the

Authority or the Resolution Committee, as the case may be,

under the Act, or any regulations and Rules issued thereunder;

(b) without reasonable excuse alters, suppresses,

conceals, destroys or refuses to produce any document which he

is lawfully required to produce under these regulations, under

the Act and any Rules issued thereunder transposing the BRRD;

(c)

on any matter relating to the BRRD, makes a

statement, promise or forecast which he knows to be

misleading, false or deceptive, or dishonestly conceals any

material facts, or recklessly makes (dishonestly or otherwise) a

statement, promise or forecast which is misleading, false or

deceptive,

shall be guilty of an offence

(2) Any person who is knowingly a part to, or procures or aids

and abets the commission of any offence under sub-regulation (1),

shall be guilty of an offence and shall be liable to the same penalties

as the principal offender.

(3) Any person found guilty of an offence shall, on conviction,

be liable to a fine (multa) not exceeding two million Euro

(€2,000,000) or to a term of imprisonment not exceeding three years

or to both such fine and imprisonment.

(4) No proceedings for an offence under the Malta Financial

Services Authority Act shall be commenced without the sanction of

the Attorney General.

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Reg. 111 — Recovery and Resolution Regulations, 2015 Open official source

(1) The Authority and the Resolution Committee, as the Administrative

case may be, may impose administrative penalties and other penalties

other

administrative measures in respect of breaches of the provisions of administrative

measures.

the Act and these regulations and, or of any Rules issued under the

Act transposing the BRRD, and shall take all measures necessary to

ensure that they are implemented.

(2) The administrative penalties and other administrative

measures taken pursuant to sub-regulation (1) shall be effective,

proportionate and dissuasive.

(3) Where the obligations arising under this regulation apply

to credit institutions, financial institutions and Union parent

undertakings, in the event of a breach of any such obligation or of a

failure to comply with a directive issued by, as the case may be, the

Authority or the Resolution Committee under the Act, or any

regulations or Rules issued thereunder transposing the BRRD, the

Authority and, or the Resolution Committee may, subject to the

conditions laid down in Maltese law, by notice in writing and without

recourse to a court hearing, impose administrative penalties on

directors, and on other natural persons who under Maltese law are

responsible for the breach or for the failure to comply with any such

directive.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 112 — Recovery and Resolution Regulations, 2015 Open official source

The Authority and the Resolution Committee shall have all Investigatory

the information-gathering powers and investigatory powers which are and

gathering

powers by the

necessary for the exercise of their respective functions.

Authority and

the Resolution

Committee.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 113 — Recovery and Resolution Regulations, 2015 Open official source

The Authority and the Resolution Committee shall Powers to

exercise their respective administrative powers to impose penalties in impose

by the Authority

such a way as to ensure full and complete adherence to the and

Resolution

requirements and obligations arising out of the Act and any Committee.

regulations and Rules issued thereunder transposing the BRRD, either

directly or in collaboration with other authorities, in terms of law and

as warranted by the relevant circumstances.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 114 — Recovery and Resolution Regulations, 2015 Open official source

(1) Without prejudice to the powers of the Authority to Instances when

impose administrative penalties for breaches of provisions of the Act administrative

penalties and

or regulations or rules issued thereunder, administrative penalties and other

may be imposed

other administrative measures may be imposed by the Authority in by the Authority

and the

respect of breaches, including the following

Resolution

Committee.

(a)

failure to draw up, maintain and update recovery

plans, and maintain detailed records of financial contracts, in

breach of regulation 5;

(b) failure to draw up and submit to the Authority a

group recovery plan, in breach of regulation 7;

(c)

failure to submit to the Authority a revised recovery

plan or group recovery plan and, or fails to take measures as

directed by the Authority, in breach of regulations 6 and 8;

(d) failure to include a framework of indicators

established by the institution, identifying the points at which

appropriate actions may be taken, or failure to put in place

appropriate arrangements for the regular monitoring of

indicators, in breach of regulation 9;

(e)

failure to notify an intention to provide group

financial support to the Authority, in breach of regulation 25;

(f)

failure of group entities to make public the

information on the group financial support agreement and to

update such information, in terms of regulations 26, in breach of

such regulation;

(g) failure to comply with a requirement imposed by the

Authority as an early intervention measure, in breach of

regulation 27;

(h) failure to comply with a requirement imposed by the

Authority on the removal of senior management or of the board

of directors, and or failure to appoint new senior management or

a new board of directors with the approval of the Authority.

(2) Without prejudice to the powers of the Resolution

Committee to impose administrative penalties for breaches of

provisions of the Act or regulations or rules issued thereunder,

administrative penalties and other administrative measures may be

imposed by the Resolution Committee in respect of breaches,

including the following

(a)

failure to provide all the information necessary for

the development of resolution plans infringing regulation 11;

(b) failure of the board of directors of a credit institution

or an entity referred to in paragraphs (b), (c) or (d) of the

definition "entity" in regulation 2(1) to notify the Authority

when the said credit institution or entity is failing or likely to

fail infringing regulation 81(1).

(3) In the cases referred to in sub-regulations (1) and (2), the

administrative penalties and other administrative measures that can

be applied include at least the following

(a)

a public statement which indicates the natural

person, credit institution, financial institution, Union parent

undertaking or other legal person responsible and the nature of

the breach;

(b) an order requiring the natural or legal person

responsible to cease the conduct and to desist from a repetition

of that conduct;

(c)

a temporary ban against any director or member of

the senior management of the credit institution or the entity

referred to in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1) or any other natural person, who is held

responsible, to exercise functions in credit institutions or

entities referred to in paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1);

(d) in the case of a legal person, administrative

pecuniary penalties of up to 10% of the total annual net turnover

of that legal person in the preceding business year

Provided that where the legal person is a subsidiary

of a parent undertaking, the relevant turnover shall be turnover

resulting from the consolidated accounts of the ultimate parent

undertaking in the preceding business year;

(e)

in the case of a natural person, administrative

pecuniary penalties of up to five million euro (€5,000,000);

(f)

administrative pecuniary penalties of up to twice the

amount of the benefits derived from the breach where that

benefit can be determined.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 115 — Recovery and Resolution Regulations, 2015 Open official source

In the exercise of their powers to impose penalties, the Co-operation

and co-

Resolution Committee shall

ordination.

(a)

cooperate closely to ensure that administrative

penalties or other administrative measures produce the desired

results; and

(b) coordinate their action when dealing with cross-

border cases.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 116 Exchange of information on penalties and maintenance of a central database. — Recovery and Resolution Regulations, 2015 Open official source

Subject to professional secrecy requirements referred to in

regulation 84, the Authority and, or the Resolution Committee, as the

case may be, shall inform the EBA of all administrative penalties

imposed by them under regulation 114 and of the status of that appeal

or outcome thereof for the purpose of publication of administrative

penalties on the central databases of the EBA, which the Authority

and the Resolution Committee shall consult, where appropriate, in the

carrying out of their functions and duties.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 117 Effective application of penalties and exercise of powers to impose penalties. — Recovery and Resolution Regulations, 2015 Open official source

When determining the type of administrative penalties or

other administrative measures and the level of administrative

pecuniary penalties, the Authority and, or the Resolution Committee,

as the case may be, shall take into account all relevant circumstances,

including, where appropriate

(a)

the gravity and the duration of the breach;

(b) the degree of responsibility of the natural or legal

person responsible for the breach;

(c)

the financial strength of the natural or legal person

responsible for the breach, for example as indicated by the total

turnover of the responsible legal person or the annual income of

the responsible natural person;

(d) the amount of profits gained or losses avoided by the

natural or legal person responsible, insofar as they can be

determined;

(e)

the losses for third parties caused by the breach,

insofar as they can be determined;

(f)

the level of cooperation of the natural or legal

person responsible with the Authority and the Resolution

Committee;

(g) previous breaches by the natural or legal person

responsible;

(h)

any potential systemic consequences of the breach.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 118 Right of appeal. — Recovery and Resolution Regulations, 2015 Open official source

Any person subject to a decision taken by the Resolution

Committee in terms of these regulations, imposing upon such person

an administrative penalty and, or administrative measure, may appeal

against such a decision in terms of the First Schedule to the Act.

Malta Government Gazette — Legal Notice 2015 301 · Gazzetta tal-Gvern ta’ Malta Nru. 19,475 – 18.09.2015 — Recovery and Resolution Regulations, 2015
Reg. 119 Cooperation with EBA. — Recovery and Resolution Regulations, 2015 Open official source

(1) The Authority and the Resolution Committee shall

cooperate with the EBA for the purposes of these regulations in

accordance with Regulation (EU) No 1093/2010.

(2) The Authority and the Resolution Committee shall,

without delay, provide the EBA with all the information necessary to

carry out its duties in accordance with Article 35 of Regulation (EU)

No 1093/2010.

Schedule 1

SECTION A

Information to be included in recovery plans

The recovery plan shall include the following information

(1) a summary of the key elements of the plan and a summary

of overall recovery capacity;

(2) a summary of the material changes to the institution since

the most recently filed recovery plan;

(3) a communication and disclosure plan outlining how the

institution intends to manage any potentially negative market

reactions;

(4) a range of capital and liquidity actions required to maintain

or restore the viability and financial position of the institution;

(5) an estimation of the time-frame for executing each

material aspect of the plan;

(6) a detailed description of any material impediment to the

effective and timely execution of the plan, including consideration of

impact on the rest of the group, customers and counterparties;

(7) identification of critical functions;

(8) a detailed description of the processes for determining the

value and marketability of the core business lines, operations and

assets of the institution;

(9) a detailed description of how recovery planning is

integrated into the corporate governance structure of the institution as

well as the policies and procedures governing the approval of the

recovery plan and identification of the persons in the organisation

responsible for preparing and implementing the plan;

(10) arrangements and measures to conserve or restore the

institution’s own funds;

(11) arrangements and measures to ensure that the institution

has adequate access to contingency funding sources, including

potential liquidity sources, an assessment of available collateral and

an assessment of the possibility to transfer liquidity across group

entities and business lines, to ensure that it can continue to carry out

its operations and meet its obligations as they fall due;

(12) arrangements and measures to reduce risk and leverage;

(13) arrangements and measures to restructure liabilities;

(14) arrangements and measures to restructure business lines;

(15) arrangements and measures necessary to

maintain

continuous access to financial markets infrastructures;

(16) arrangements and measures necessary to maintain the

continuous functioning of the institution’s operational processes,

including infrastructure and IT services;

(17) preparatory arrangements to facilitate the sale of assets or

business lines in a time-frame appropriate for the restoration of

financial soundness;

(18) other management actions or strategies to restore financial

soundness and the anticipated financial effect of those actions or

strategies;

(19) preparatory measures that the institution has taken or plans

to take in order to facilitate the implementation of the recovery plan,

including those necessary to enable the timely recapitalisation of the

institution;

(20) a framework of indicators which identifies the points at

which appropriate actions referred to in the plan may be taken.

SECTION B

Information that the Resolution Committee may request institutions

to provide for the purposes of drawing up and maintaining

resolution plans

The Resolution Committee may request institutions to provide

for the purposes of drawing up and maintaining resolution plans at

least the following information

(1) a detailed description of the institution’s organisational

structure including a list of all legal persons;

(2) identification of the direct holders and the percentage of

voting and non-voting rights of each legal person;

(3) the location, jurisdiction of incorporation, licensing and

key management associated with each legal person;

(4) a mapping of the institution’s critical operations and core

business lines including material asset holdings and liabilities relating

to such operations and business lines, by reference to legal persons;

(5) a detailed description of the components of the institution’s

and all its legal entities’ liabilities, separating, at a minimum by types

and amounts of short term and long-term debt, secured, unsecured

and subordinated liabilities;

(6) details of those liabilities of the institution that are eligible

liabilities;

(7) an identification of the processes needed to determine to

whom the institution has pledged collateral, the person that holds the

collateral and the jurisdiction in which the collateral is located;

(8) a description of the off balance sheet exposures of the

institution and its legal entities, including a mapping to its critical

operations and core business lines;

(9) the material hedges of the institution including a mapping

to legal persons;

(10) identification of the major or most critical counterparties

of the institution as well as an analysis of the impact of the failure of

major counterparties in the institution’s financial situation;

(11) each system on which the institution conducts a material

number or value amount of trades, including a mapping to the

institution’s legal persons, critical operations and core business lines;

(12) each payment, clearing or settlement system of which the

institution is directly or indirectly a member, including a mapping to

the institution’s legal persons, critical operations and core business

lines;

(13) a detailed inventory and description of the key

management information systems, including those for risk

management, accounting and financial and regulatory reporting used

by the institution including a mapping to the institution’s legal

persons, critical operations and core business lines;

(14) an identification of the owners of the systems identified in

point (13), service level agreements related thereto, and any software

and systems or licences, including a mapping to their legal entities,

critical operations and core business lines;

(15) an identification and mapping of the legal persons and the

interconnections and interdependencies among the different legal

persons such as

(i)

common or shared personnel, facilities and systems;

(ii)

capital, funding or liquidity arrangements;

(iii)

existing or contingent credit exposures;

(iv) cross guarantee agreements, cross-collateral

arrangements, cross-default provisions and cross-affiliate

netting arrangements;

(v) risks

transfers

and

back-to-back

trading

arrangements; service level agreements;

(16) the European regulatory authority and the European

resolution authority for each legal person;

(17) the director responsible for providing the information

necessary to prepare the resolution plan of the institution as well as

those responsible, if different, for the different legal persons, critical

operations and core business lines;

(18) a description of the arrangements that the institution has in

place to ensure that, in the event of resolution, the Resolution

Committee will have all the necessary information, as determined by

the Resolution Committee, for applying the resolution tools and

powers;

(19) all the agreements entered into by the institutions and their

legal entities with third parties the termination of which may be

triggered by a decision of the authorities to apply a resolution tool and

whether the consequences of termination may affect the application

of the resolution tool;

(20) a description of possible liquidity sources for supporting

resolution;

(21) information on asset encumbrance, liquid assets, off-

balance sheet activities, hedging strategies and booking practices.

SECTION C

Matters that the Resolution Committee is to consider when assessing

the resolvability of an institution or group

When assessing the resolvability of an institution or group, the

Resolution Committee shall consider the following

When assessing the resolvability of a group, references to an

institution shall be deemed to include any institution or entity referred

to in paragraphs (c) or (d) of the definition "entity" in regulation 2(1)

within a group

(1) the extent to which the institution is able to map core

business lines and critical operations to legal persons;

(2) the extent to which legal and corporate structures are

aligned with core business lines and critical operations;

(3) the extent to which there are arrangements in place to

provide for essential staff, infrastructure, funding, liquidity and

capital to support and maintain the core business lines and the critical

operations;

(4) the extent to which the service agreements that the

institution maintains are fully enforceable in the event of resolution of

the institution;

(5) the extent to which the governance structure of the

institution is adequate for managing and ensuring compliance with

the institution’s internal policies with respect to its service level

agreements;

(6) the extent to which the institution has a process for

transitioning the services provided under service level agreements to

third parties in the event of the separation of critical functions or of

core business lines;

(7) the extent to which there are contingency plans and

measures in place to ensure continuity in access to payment and

settlement systems;

(8) the adequacy of the management information systems in

ensuring that the Resolution Committee and the European resolution

authorities are able to gather accurate and complete information

regarding the core business lines and critical operations so as to

facilitate rapid decision making;

(9) the capacity of the management information systems to

provide the information essential for the effective resolution of the

institution at all times even under rapidly changing conditions;

(10) the extent to which the institution has tested its

management information systems under stress scenarios as defined by

the Resolution Committee;

(11) the extent to which the institution can ensure the continuity

of its management information systems both for the affected

institution and the new institution in the case that the critical

operations and core business lines are separated from the rest of the

operations and business lines;

(12) the extent to which the institution has established adequate

processes to ensure that it provides the Resolution Committee and the

European resolution authorities with the information necessary to

identify depositors and the amounts covered by the deposit guarantee

schemes;

(13) where the group uses intra-group guarantees, the extent to

which those guarantees are provided at market conditions and the risk

management systems concerning those guarantees are robust;

(14) where the group engages in back-to-back transactions, the

extent to which those transactions are performed at market conditions

and the risk management systems concerning those transactions

practices are robust;

(15) the extent to which the use of intra-group guarantees or

back-to-back booking transactions increases contagion across the

group;

(16) the extent to which the legal structure of the group inhibits

the application of the resolution tools as a result of the number of

legal persons, the complexity of the group structure or the difficulty

in aligning business lines to group entities;

(17) the amount and type of eligible liabilities of the institution;

(18) where the assessment involves a mixed activity holding

company, the extent to which the resolution of group entities that are

institutions or financial institutions could have a negative impact on

the non-financial part of the group;

(19) the existence and robustness of service level agreements;

(20) whether third-country authorities have the resolution tools

necessary to support resolution actions by European resolution

authorities, and the scope for coordinated action between European

Union and third-country authorities;

(21) the feasibility of using resolution tools in such a way

which meets the resolution objectives, given the tools available and

the institution’s structure;

(22) the extent to which the group structure allows the

Resolution Committee to resolve the whole group or one or more of

its group entities without causing a significant direct or indirect

adverse effect on the financial system, market confidence or the

economy and with a view to maximising the value of the group as a

whole;

(23) the arrangements and means through which resolution

could be facilitated in the cases of groups that have subsidiaries

established in different jurisdictions;

(24) the credibility of using resolution tools in such a way

which meets the resolution objectives, given possible impacts on

creditors, counterparties, customers and employees and possible

actions that third-country authorities may take;

(25) the extent to which the impact of the institution’s

resolution on the financial system and on financial market’s

confidence can be adequately evaluated;

(26) the extent to which the resolution of the institution could

have a significant direct or indirect adverse effect on the financial

system, market confidence or the economy;

(27) the extent to which contagion to other institutions or to the

financial markets could be contained through the application of the

resolution tools and powers;

(28) the extent to which the resolution of the institution could

have a significant effect on the operation of payment and settlement

systems.

€8.55

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