Recovery and Resolution (Amendment) Regulations, 2021

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 20,551, 8 ta’ Jannar, 2021 B 13

L.N. 6 of 2021

MALTA FINANCIAL SERVICES AUTHORITY ACT

(CAP. 330)

Recovery and Resolution (Amendment) Regulations, 2021

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

of the Malta Financial Services Authority Act, the Minister

responsible for the regulation of financial services, acting on the

advice of the Malta Financial Services Authority and the Resolution

Authority, has made the following regulations

The title of these regulations is the Recovery and Citation.

Resolution (Amendment) Regulations, 2021 and they shall be read and

construed as one with the Recovery and Resolution Regulations, S.L. 330.09.

hereinafter referred to as the " principal regulations.".

Sub-regulation (1) of regulation 2 of the principal Amends

regulation 2 of

regulations shall be amended as follows

the principal

regulations.

(a) in the definition "aggregate amount", the words

"eligible liabilities", shall be substituted the words "bail-inable

liabilities";

(b) immediately after the definition "back-to-back

transaction", there shall be added the following new definition

" "bail-inable 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) and (d)

of the definition "entity", that are not excluded from the

scope of the bail-in tool by virtue of regulation 44(2);";

(c) immediately

after

the

definition

"central

counterparty", there shall be added the following new

definitions

" "combined buffer requirement" shall have the same

meaning as that assigned to it in point (6) of Article 128 of

the CRD;

"Common Equity Tier 1 capital" means Common

Equity Tier 1 capital as calculated in accordance with

Article 50 of the CRR;";

(d) the definition "covered bond" shall be substituted by

the following

" "covered bond" means a covered bond as defined in

point (1) of Article 3 of Directive (EU) 2019/2162 of the

European Parliament and of the Council of 27 November

2019 on the issue of covered bonds and covered bond

public supervision and amending Directives 2009/65/EC

and 2014/59/EU or, with regard to an instrument that is

issued before 8 July 2022, a bond 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 applicable on the date of its issue;"

(e) the definition "eligible liabilities" shall be substituted

by the following

" "eligible liabilities" means bail-inable liabilities that

fulfil, as applicable, the conditions of regulation 45B or

paragraph (a) of regulation 45F(2) and Tier 2 instruments

that meet the conditions of point (b) of Article 72a(1) of the

CRR;";

(f) immediately after the definition "financial

instrument", there shall be added the following new definition

" "global systemically important institution" or "G-

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

(133) of Article 4(1) of the CRR;";

(g) immediately after the definition "investor", there

shall be added the following new definition

" "material subsidiary" has the same meaning as that

assigned to it in point (135) of Article 4(1) of the CRR;";

(h) immediately after the definition "Resolution

Committee", there shall be added the following new definitions

" "resolution entity" means either of the following

(a) a legal person established in the European

Union, that in accordance with regulation 12, is

identified by the Resolution Committee as an entity in

respect of which the resolution plan provides for

resolution action; or

(b) an institution that is not part of a group

that is subject to consolidated supervision pursuant to

Articles 111 and 112 of the CRD, in respect of which

the resolution plan drawn up pursuant to regulation

10 provides for resolution action;

"resolution group" means

(a)

a resolution entity and its subsidiaries that

are not

(i)

resolution entities themselves;

(ii) subsidiaries

of

other

resolution

entities; or

(iii) entities established in a third

country that are not included in the resolution

group in accordance with the resolution plan

and their subsidiaries; or

(b) credit institutions permanently affiliated

to a central body and the central body itself when at

least one of those credit institutions or the central

body is a resolution entity, and their respective

subsidiaries;";

(i) immediately after the definition "significant branch",

there shall be added the following new definition

" "subordinated eligible instruments"

means

instruments that meet all the conditions referred to in

Article 72a of the CRR with the exception of paragraphs

(3) to (5) of Article 72b of the said Regulation;";

(j) the definition "subsidiary" shall be substituted by the

following

" "subsidiary" shall have the same meaning as that

assigned to it in point (16) of Article 4(1) of the CRR, and

for the purposes of applying regulations 7, 12, 17, 18, 45 to

45L, 59 to 62, 91 and 92 to resolution groups, includes,

where and as appropriate, credit institutions that are

permanently affiliated to a central body, by the central body

itself, and their respective subsidiaries, taking into account

the way in which the resolution groups mentioned above

comply with regulation 45E(3);".

Regulation 10 of the principal regulations shall be amended

as follows

(a) in sub-regulation (6) thereof, there shall be added the

following new proviso

"Provided further that, the review referred to in this

sub-regulation shall be carried out after the implementation

of resolution actions or the exercise of powers referred to in

regulation 59.";

(b) paragraph (o) of sub-regulation (7) thereof, shall be

substituted by the following

"(o) the requirements referred to in regulations 45E

and 45F and a deadline to reach that level in accordance

with regulation 45L;";

(c) paragraph (p) of sub-regulation (7) thereof, shall be

substituted by the following

"(p) where the Resolution Committee applies

regulation 45B(4), (5) or (7), a timeline for compliance by

the resolution entity in accordance with regulation 45L;";

(d) in sub-paragraph (7) thereof, there shall be added the

following new proviso

"Provided that, when setting the deadlines referred to

in paragraphs (o) and (p) in the circumstances referred to in

the second proviso of sub-regulation 6, the Resolution

Committee shall take into account the deadline to comply

with the requirement referred to in article 104b of the

CRD.".

Regulation 12 of the principal regulations shall be amended

as follows

(a) sub-regulation (1) thereof, shall be substituted by the

following

"(1) The Resolution Committee shall, in its capacity

as the group-level resolution authority, together with the

European 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. The group resolution plan shall

identify measures to be taken in respect of

(a)

the Union parent undertaking;

(b) the subsidiaries that are part of the group

and that are established 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

established outside the European Union;

Provided that, the resolution plan shall identify

for each group, the resolution entities and the resolution

groups.";

(b) paragraph (a) of sub-regulation (3) thereof, shall be

substituted by the following

"(a) set out the resolution actions that are to be taken

for resolution entities in the scenarios referred to in

regulation 10(3), and the implications of those resolution

actions in respect of other group entities referred to in

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

regulation 2(1), the parent undertaking and subsidiary

institutions;";

(c) immediately after paragraph (a) of sub-regulation (3)

thereof, there shall be added the following new paragraph

"(aa) where a group comprises more than one

resolution group, set out the resolution actions that are to be

taken from the resolution entities of each resolution group

and the implications of those actions on both the following

(i) other group entities that belong to the

same resolution group; and

(ii)

other resolution groups;";

(d)

paragraph (b) of sub-regulation (3) thereof, shall be

substituted by the following

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

could be applied and the resolution powers exercised, with

respect to resolution entities established in the European

Union in a coordinated manner, including measures to

facilitate the purchase by a third party of the group as a

whole, of separate business lines or activities that are

provided by a number of group entities, or of particular

group entities or resolution groups, and identify any

potential impediments to a coordinated resolution;";

(e) paragraph (e) of sub-regulation (3) thereof, shall be

substituted by the following

"(e) set out any additional actions, not referred to in

these regulations, which the relevant European resolution

authorities intend to take in relation to the entities within

each resolution group;".

Regulation 13 of the principal regulations shall be amended

as follows

(a) the two provisos in sub-regulation (6) thereof, shall

be substituted by the following

"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

Provided further that, where a group is composed of

more than one resolution group, the planning of the

resolution actions referred to in paragraph (aa) of

regulation 12(3) shall be included in a joint decision as

referred to in this sub-regulation.";

(b) the introductory paragraph to sub-regulation (8)

thereof, shall be substituted by the following

"(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, if it disagrees

with the group resolution plan, make its own decision and,

where appropriate, identify the resolution entity and draw

up and maintain a resolution plan for the resolution group

composed of entities under its jurisdiction. When in

disagreement, the Resolution Committee, in its capacity as

the resolution authority responsible for the subsidiary, shall

substantiate its disagreement and 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:".

Regulation 16 of the principal regulations shall be amended Amends

regulation 16

as follows

of the principal

regulations.

(a) the proviso to sub-regulation (1) thereof, shall be

substituted by the following

"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 resolution entities of that

group while avoiding, to the maximum extent possible, any

significant adverse consequences on the financial system,

including in circumstances of broader financial instability

or system wide events of Malta and, or of the Member

States in which the other group entities or branches are

situated, or other Member States or the European Union,

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.";

(b) immediately after the proviso of sub-regulation (2)

thereof, there shall be added the following new sub-regulation

"(3) Where a group is composed of more than one

resolution group, the Resolution Committee shall, together

with the authorities referred to in sub-regulation (1), assess

the resolvability of each group in accordance with this

regulation

Provided that, the assessment referred to in this

sub-regulation shall be performed in addition to the

assessment of resolvability of the entire group and shall be

made within the decision-making procedure laid down in

regulation 13.".

Immediately after regulation 16 of the principal regulations

there shall be added the following new regulation

(1) Where an entity meets the

combined buffer requirement when considered in

addition to each of the requirements referred to in

points (a), (b) and (c) of Article 141a(1) of the CRD,

but it fails to meet the combined buffer requirement

when considered in addition to the requirements

referred to in regulations 45C and 45D, when

calculated in accordance with paragraph (a) of

regulation 45(2), the Resolution Committee shall

have the power, in accordance with sub-regulations

(2) and (3), to prohibit an entity from distributing

more than the Maximum Distributable Amount

related to the minimum requirement for own funds

and eligible liabilities, as calculated in accordance

with sub-regulation (4), through any of the

following actions

(a) make a distribution in connection

with Common Equity Tier 1 capital;

(b) create an obligation to pay variable

remuneration or discretionary pension

benefits, or to pay variable remuneration if the

obligation to pay was created at a time when

the entity failed to meet the combined buffer

requirement; or

(c) make payments on Additional Tier

1 instruments

Provided that, the entity shall

immediately notify the Resolution Committee

thereof.

(2) In the instances referred to in sub-

regulation (1), the Resolution Committee, after

consulting the Authority, shall without unnecessary

delay assess whether to exercise the power referred

to in sub-regulation (1), taking into account all of

the following elements

(a) the reason, duration and magnitude

of the failure and its impact on resolvability;

(b) the development of the entity’s

financial situation and the likelihood of it

fulfilling, in the foreseeable future, the

condition referred to in paragraph (a) of

regulation 32(1);

(c) the prospect that the entity will be

able to ensure compliance with the

requirements referred to in sub-regulation (1)

within a reasonable timeframe;

(d) where the entity is unable to

replace liabilities that no longer meet the

eligibility or maturity criteria laid down in

Articles 72b and 72c of the CRR, or in

regulations 45B or 45F(2), if that inability is

idiosyncratic or is due to market-wide

disturbance;

(e) whether the exercise of the power

referred to in sub-regulation (1) is the most

adequate and proportionate means of

addressing the situation of the entity, taking

into account its potential impact on both the

financing conditions and resolvability of the

entity concerned.

Provided that, the Resolution

Committee shall repeat its assessment of

whether to exercise the power referred to in

sub-regulation (1) at least every month for as

long as the entity continues to be in the

situation referred to in sub-regulation (1).

(3) If the Resolution Committee finds that

the entity is still in the situation referred to in sub-

regulation (1) nine months after such situation has

been notified by the entity, the Resolution

Committee, after consulting the Authority, shall

exercise the power referred to in sub-regulation (1),

except where the Resolution Committee finds,

following an assessment, that at least two of the

following conditions are met

(a) the failure is due to a serious

disturbance to the functioning of financial

markets which leads to broad-based financial

market stress across several segments of

financial markets;

(b) the disturbance referred to in

paragraph (a) not only results in the increased

and eligible liabilities instruments of the entity

or increased costs for the entity, but also leads

to a full or partial closure of markets which

prevents the entity from issuing own funds

instruments and eligible liabilities instruments

on those markets;

(c) the market closure referred to in

paragraph (b) is observed not only for the

concerned entity but also for several other

entities;

(d) the disturbance referred to in

paragraph (a) prevents the concerned entity

from issuing own funds instruments and

eligible liabilities instruments sufficient to

remedy the failure; or

(e) an exercise of the power referred to

in sub-regulation (1) leads to negative spill-

over effects for part of the banking sector,

thereby potentially undermining financial

stability

Provided that, where the exception

referred to in this sub-regulation applies, the

Resolution Committee shall notify the

Authority of its decision and shall explain its

assessment in writing

Provided further that, every month,

the Resolution Committee shall repeat its

assessment of whether the said exception

applies.

(4) The Maximum Distributable Amount

related to the minimum requirement for own funds

and eligible liabilities shall be calculated by

multiplying the sum calculated in accordance with

sub-regulation (5) by the factor determined in

accordance with sub-regulation (6). The Minimum

Distributable Amount related to the minimum

requirement for own funds of eligible liabilities

shall be reduced by any amount resulting from any

of the actions referred to in sub-regulation (1)(a),

(b) or (c).

(5) The sum to be multiplied in accordance

with sub-regulation (4) shall consist of

(a) any interim profits not included in

Common Equity Tier 1 capital pursuant to

Article 26(2) of the CRR, net of any

distribution of profits or any payment

resulting from the actions referred to in sub-

regulation (1)(a), (b) or (c); plus

(b) any year-end profits not included

in Common Equity Tier 1 capital pursuant to

Article 26(2) of the CRR, net of any

distribution of profits or any payment

resulting from the actions referred to in sub-

regulation (1)(a), (b) or (c); minus

(c) amounts which would be payable

by tax if the items specified in paragraphs (a)

and (b) were to be retained.

(6) The factor referred to in sub-regulation 4

shall be determined as follows

(a) where the Common Equity Tier 1

capital maintained by the entity which is not

used to meet any of the requirements set out in

Article 92a of the CRR and in regulations 45C

and 45D, expressed as a percentage of the

total risk exposure amount calculated in

accordance with Article 92(3) of the CRR, is

within the first (that is, the lowest) quartile of

the combined buffer requirement, the factor

shall be 0;

(b) where the Common Equity Tier 1

capital maintained by the entity which is not

used to meet any of the requirements set out in

Article 92a of the CRR and in regulations 45C

and 45D, expressed as a percentage of the

total risk exposure amount calculated in

accordance with Article 92(3) of the CRR, is

within the second quartile of the combined

buffer requirement, the factor shall be 0,2;

(c) where the Common Equity Tier 1

capital maintained by the entity which is not

used to meet the requirements set out in

Article 92a of the CRR and in regulations 45C

and 45D, expressed as a percentage of the

total risk exposure amount calculated in

accordance with Article 92(3) of the CRR, is

within the third quartile of the combined

buffer requirement, the factor shall be 0,4;

(d) where the Common Equity Tier 1

capital maintained by the entity which is not

used to meet the requirements set out in

Article 92a of the CRR and in regulations 45C

and 45D, expressed as a percentage of the

total risk exposure amount calculated in

accordance with Article 92(3) of the CRR, is

within the fourth (that is, the highest) quartile

of the combined buffer requirement, the factor

shall be 0,6;

The lower and upper bounds of each quartile

of the combined buffer requirement shall be

calculated as follows

Lower bound of quartile = Combined buffer requirement x (Q n - 1)

Upper bound of quartile = Combined buffer requirement x Q n

where "Q n " refers to the ordinal number of the quartile concerned.".

8. Regulation 17 of the principal regulations shall be amended

as follows

(a) sub-regulation (1) thereof, shall be substituted by the

following

"(1) Where an assessment of resolvability for an

entity is carried out in accordance with regulations 15 and

16, and where the Resolution Committee, after consulting

the Authority, determines that there are substantive

impediments to the resolvability of that entity, the

Resolution Committee shall notify in writing such

determination to the entity concerned, to the Authority and

to the European resolution authorities of the jurisdictions in

which significant branches are located.";

(b) sub-regulations (3) and (4) thereof, shall be

substituted by the following

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

notification made in accordance with sub-regulation (1),

the entity shall propose to the Resolution Committee

possible measures to address or remove the substantive

impediments identified in the said notification.

Provided that, the entity shall within two weeks

of the date of receipt of a notification made in accordance

with sub-regulation (1), propose to the Resolution

Committee possible measures and the timeline for their

implementation to ensure that the entity complies with

regulations 45E or 45F and the combined buffer

requirement, where a substantive impediment to

resolvability is due to either of the following situations

(a) the entity meets the combined buffer

requirement when considered in addition to each of

the requirements referred to in points (a), (b) and (c)

of Article 141a(1) of the CRD, but it does not meet

the combined buffer requirement when considered in

addition to the requirements referred to in regulations

45C and 45D when calculated in accordance with

paragraph (a) of regulation 45(2); or

(b) the entity does not meet the requirements

referred to in Articles 92a and 494 of the CRR or the

requirements referred to in regulations 45C and 45D

Provided further that, the timeline for the

implementation of measures proposed under

paragraph (b) of the first proviso hereof shall take

into account the reasons for the substantive

impediment

Provided further that, the Resolution

Committee shall, after consulting the Authority,

assess whether the measures proposed under

paragraphs (a) and (b) of the first proviso hereof

effectively address or remove the substantive

impediment in question.

(4) Where the Resolution Committee finds that the

measures proposed by an entity 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 entity to take

alternative measures that may achieve that objective, and

notify in writing those measures to the said entity, 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 entity would not be 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 that those impediments to resolvability

present for financial stability and the effect of the measures

on the business of the entity, its stability and its ability to

contribute to the economy.";

(c) in paragraphs (a), (b), (d), (e), (g) and (h) of sub-

regulation (5) thereof, the word "institution", wherever it occurs,

shall be substituted by the word "entity";

(d) immediately after paragraph (h) of sub-regulation (5)

thereof, there shall be added the following new paragraph

"(ha) require an institution or entity referred to in

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

regulation 2(1) to submit a plan to restore compliance with

the requirements of regulations 45E or 45F, expressed as a

percentage of the total risk exposure amount calculated in

accordance with Article 92(3) of the CRR and, where

applicable, with the combined buffer requirement and with

the requirements referred to in regulations 45E or 45F,

expressed as a percentage of the total exposure measure

referred to in Articles 429 and 429a of the CRR;";

(e) paragraphs (i), (j) and (k) of sub-regulation (5)

thereof, shall be substituted by the following

"(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 regulations 45E or 45F;

(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

regulations 45E or 45F, including in particular to attempt to

renegotiate any eligible liability, additional Tier 1 or Tier 2

instruments 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 under

the law of the jurisdiction governing that liability or

instrument;

(k) where an entity 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 entity, if necessary in order to

facilitate the resolution of the entity and to avoid the

application of the resolution tools and the exercise of the

powers referred to in regulations 31 to 86, both inclusive,

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

group.";

(f) immediately after paragraph (j) of sub-

regulation 5 thereof, there shall be added the following new

paragraph

(ja) for the purpose of ensuring ongoing

compliance with regulations 45E or 45F, require an

institution or entity referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1), to

change the maturity profile of

(i) own funds instruments, after having

obtained the consent of the Authority, and

(ii) eligible liabilities referred to in

regulation 45B and in paragraph (a) of

regulation 45F(2);

(g) sub-regulation (7) thereof, shall be substituted

by the following

"(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 entity, on the

internal market for financial services, and on the

financial stability in other Member States and in the

Union as a whole.".

9. Sub-regulations (1) to (7) of regulation 18 of the principal

regulations shall be substituted by the following

"(1) The Resolution Committee shall:–

(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 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 resolution entities and their

subsidiaries that are entities as referred to in the definition of

"entity" under regulation 2(1) and 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 within their remit, 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 and in relation to

resolution groups where a group is composed of more than one

resolution group. The report shall consider the impact on the

group’s business model and recommend any proportionate and

targeted measures that, in the Resolution Committee’s view, in

its capacity as the group-level resolution authority, are necessary

or appropriate to remove those impediments

Provided that, where an impediment to the

resolvability of the group is due to a situation of a group entity

referred to in the proviso of regulation 17(3), the Resolution

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

authority, notify its assessment of the said impediment to the

Union parent undertaking, after consulting the European

resolution authorities of the resolution entity and of its

subsidiary institutions.

(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

Provided that, where the impediments identified in

the report are due to a situation of a group entity referred to in

the first proviso of regulation 17(3), the Union parent

undertaking shall, within two weeks of the date of receipt of a

notification made in accordance with the proviso of sub-

regulation (2), propose to the Resolution Committee, in its

capacity as the group-level resolution authority possible

measures and the timeline for their implementation to ensure that

the group entity complies with the requirements referred to in

regulations 45E or 45F expressed as a percentage of the total risk

exposure amount calculated in accordance with Article 92(3) of

the CRR and, where applicable, with the combined buffer

requirement, and with the requirements referred to in the said

regulations 45E and 45F expressed as a percentage of the total

exposure measure referred to in Articles 429 and 429a of the

CRR

Provided further that, the timeline for the

implementation of the measures proposed the first proviso shall

take into account the reasons for the substantive impediment.

The Resolution Committee shall, after consulting the Authority,

assess whether those measures effectively address or remove the

substantive impediment.

Provided further that, the Resolution Committee

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

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 substantive 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. Where the Union parent undertaking has not submitted

any observations, the joint decision shall be reached within one month

from the expiry of the four-month period referred to in sub-regulation

(4)

Provided further that, the joint decision concerning the

impediment to resolvability due to a situation referred to in the first

proviso of sub-regulation 17(3), shall be reached within two weeks of

the submission of any observations by the Union parent undertaking in

accordance with sub-regulation (3)

Provided further that, 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 point (c) of

the second paragraph of Article 31 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 relevant period

referred to in sub-regulation (5), any of the resolution authorities

mentioned in the said sub-regulation (5) have 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, in its capacity as the group-level resolution

authority, defer its decision and await any decision that the EBA

may take in accordance with Article 19(3) of the said Regulation,

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

EBA. The relevant period referred to in sub-regulation (5) shall

be deemed to be the conciliation period within the meaning of

the said Regulation. The matter shall not be referred to the EBA

after the end of the relevant period referred to in sub-regulation

(5) or after a joint decision has been reached. In the absence of

an EBA decision, the decision of the Resolution Committee in its

capacity as the group-level resolution authority shall apply.

(6A) In the absence of a joint decision within the relevant

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

Committee, where it is the relevant resolution authority, shall

make its own decision on the appropriate measures to be taken in

accordance with sub-regulation 17(4) at the resolution group-

level

Provided that, the decision referred to in this sub-

regulation shall be fully reasoned and shall take into account the

views and reservations of the European resolution authorities of

other entities of the same resolution group and of the Resolution

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

The decision shall be provided to the resolution entity by the

Resolution Committee

Provided further that, if, at the end of the relevant

period referred to in sub-regulation (5), any of the resolution

authorities mentioned in the said sub-regulation (5) have referred

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

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

Resolution Committee responsible for the resolution entity shall

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

accordance with Article 19(3) of the said Regulation, and shall

take its decision in accordance with the decision of EBA. The

relevant period referred to in sub-regulation (5) shall be deemed

to be the conciliation period within the meaning of the said

Regulation. EBA shall take its decision within one month. The

matter shall not be referred to EBA after the end of the relevant

period referred to in sub-regulation (5) or after a joint decision

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

decision of the Resolution Committee shall apply.

(7) Where the Resolution Committee is responsible for a

subsidiary that is not a resolution entity, 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

resolution entity of the same resolution group, to the European

resolution authority of the said resolution entity and where

different, to the European resolution authority acting as the

group-level resolution authority

Provided that, if at the end of the relevant period

referred to in sub-regulation (5), any of the resolution authorities

mentioned in the said sub-regulation (5) have 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 responsible for the subsidiary shall defer its decision

and await any decision that the EBA may take in accordance

with Article 19(3) of the said Regulation, and shall take its

decision in accordance with the decision of the EBA. The

relevant period referred to in sub-regulation (5) shall be deemed

to be the conciliation period within the meaning of the said

Regulation. EBA shall take its decision within one month. The

matter shall not be referred to the EBA after the end of the

relevant period referred to in sub-regulation (5) or after a joint

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

the decision of the Resolution Committee shall apply."

10. In paragraph (b) of sub-regulation (1) of regulation 32 of Amends

the principal regulations, the words "conversion of relevant capital regulation

the principal

instruments in accordance with regulation 59(2)", shall be substituted regulations.

by the words "conversion of relevant capital instruments and eligible

liabilities in accordance with regulation 59(2)";

11. Immediately after regulation 32 of the principal regulations Adds new

regulations 32A

there shall be added the following new regulations

and 32B to the

principal

regulations.

When a resolution group complies as a

whole with the conditions established in regulation

32(1), the Resolution Committee may take a

resolution action in relation to a central body and all

credit institutions permanently affiliated to it that

are part of that same resolution group.

Where an institution or entity referred to

Insolvency proceedings

institutions and entities in paragraphs (b), (c) or (d) of the definition "entity"

in regulation 2(1), in relation to which the

Resolution Committee considers that the conditions

in paragraphs (a) and (b) of regulation 32(1) are

met, but that a resolution action would not be in the

public interest in accordance with paragraph (c) of

regulation 32(1), the said institution or entity shall

be wound up in an orderly manner in accordance

with Maltese law.".

12. Sub-regulations (2) to (4) of regulation 33 of the principal Amends

regulation 33 of

regulations shall be substituted by the following

the principal

regulations.

"(2) The Resolution Committee shall 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 by the entity mentioned

(3) Where the subsidiary institutions of a mixed-activity

holding company are held directly or indirectly by an

intermediate financial holding company

(a) the resolution plan shall provide that the

intermediate financial holding company is identified as a

resolution entity; and

(b) resolution actions for the purposes of group

resolution shall be taken in relation to the intermediate

financial holding company

Provided that, the Resolution Committee shall

not take resolution actions for the purposes of group

resolution in relation to the mixed-activity holding

company.

(4) Subject to sub-regulation (3) and 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 laid down in regulation 32(1), the Resolution

Committee may take a resolution action with regard to such an

entity where all of the following conditions are fulfilled

(a)

such an entity is a resolution entity;

(b) one or more of the subsidiaries of the entity that

are institutions, but not resolution entities, comply with the

conditions laid down in regulation 32(1); and

(c) assets and liabilities of the subsidiaries referred

to in paragraph (b) are such that the failure of those

subsidiaries threatens the resolution group as a whole, and

resolution action with regard to the entity is necessary

either for the resolution of such subsidiaries which are

institutions or for the resolution of the relevant resolution

group as a whole.";

13. Immediately after regulation 33A of the principal

regulations there shall be added the following new regulation

(1)

The Resolution Committee shall, after

suspend certain

consulting the Authority, which shall reply in a timely

manner, have the power to suspend any payment or

obligations pursuant to any contract to which an

institution or entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1) is a party,

where all of the following conditions are met

(a) a determination that the institution or

entity is failing or likely to fail has been made

under paragraph (a) of regulation 32(1);

(b) there is no immediately available

private sector measure referred to in paragraph (b)

of regulation 32(1) that would prevent the failure of

the institution or entity;

(c) the exercise of the power to suspend is

deemed necessary to avoid the further deterioration

of the financial conditions of the institution or

entity; and

(d) the exercise of the power to suspend is

either

(i) necessary

to

reach

the

determination provided for in paragraph (c) of

regulation 32(1); or

(ii) necessary

to

choose

the

appropriate resolution actions or to ensure the

effective application of one or more

resolution tools.

(2) The power referred to in sub-regulation (1)

shall not apply to payment or delivery obligations to the

following

(a) systems and operators of systems

designated in accordance with Directive 98/26/EC;

(b) central counterparties authorised in the

Union pursuant to Article 14 of Regulation (EU)

No

648/2012

and

third-country

central

counterparties recognised by ESMA pursuant to

Article 25 of the said Regulation;

(c) the Central Banks.

Provided that, the Resolution Committee shall

set the scope of the power referred to in sub-regulation

(1), having regard to the circumstances of each case and

shall carefully assess the appropriateness of extending

the suspension to eligible deposits in accordance with

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

particular, covered deposits held by natural persons and

micro, small and medium-sized enterprises.

(3) The Resolution Committee shall, when

exercising the power to suspend payment or delivery

obligation under sub-regulation (1) in respect of eligible

deposits, ensure that depositors have access to an

appropriate daily amount from those deposits.

(4) The period of the suspension pursuant to sub-

regulation (1) shall be as short as possible and shall not

exceed the minimum period of time that the Resolution

Committee considers necessary for the purposes

indicated in paragraphs (c) and (d) of sub-regulation (1),

and in any event shall not last longer than the period from

the publication of a notice of suspension pursuant to sub-

regulation (8) to midnight at the end of the business day

following the day of the publication.

Provided that, at the expiry of the period of

suspension referred to in this sub-regulation, the

suspension shall cease to have effect.

(5) In exercising the power referred to in sub-

regulation (1), the Resolution Committee shall have

regard to the impact the exercise of that power might

have on the orderly functioning of financial markets and

shall consider the existing national rules, as well as

supervisory and judicial powers, to safeguard creditors’

rights and equal treatment of creditors in normal

insolvency proceedings. The Resolution Committee shall

have regard to the potential application of national

insolvency proceedings to the institution or entity as a

result of the determination in paragraph (c) of regulation

32(1) and shall make arrangements that the Resolution

Committee deems appropriate to ensure adequate

coordination with the relevant national, administrative

and, or judicial authorities.

(6) Where the obligations of payment or delivery

under a contract are suspended pursuant to sub-

regulation (1), the obligations of payment or delivery of

any counterparty to the said contract shall be suspended

for the same period of time.

(7) Obligations of payment or delivery which

would have been due during the period of suspension

shall be due immediately upon the expiry of the period of

suspension.

(8) The Resolution Committee shall, without

delay, notify the institution or entity referred to in

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

regulation 2(1), and the authorities refer to paragraphs

(a) to (h) of regulation 83(2) when exercising the power

referred to in sub-regulation (1), after a determination

has been made that the institution is failing, or likely to

fail, pursuant to paragraph (a) of regulation 32(1) and

before the resolution decision is taken.

Provided that, the Resolution Committee shall

publish or ensure the publication of the order or

instrument by which payment or delivery obligations are

suspended under this regulation and the terms and period

of suspension, by the means referred to in regulation

83(4).

(9) This regulation is without prejudice to

Maltese Law granting powers to suspend payment or

delivery obligations of the institutions or entities referred

to in sub-regulation (1), before a determination is made

that those institutions or entities are failing or likely to

fail under paragraph (a) of regulation 32(1), or to

suspend payment or delivery obligations of institutions

or entities which are to be wound up under normal

insolvency proceedings and that exceed the scope,

duration and conditions provided for in this regulation.

Provided that, the conditions provided for

under this regulation shall be without prejudice to the

conditions related to the power of the Resolution

Committee to suspend the obligations of payment or

delivery under any other law.

(10) Where the Resolution Committee exercises

the power to suspend payment or delivery obligations

with respect to an institution or an entity referred to in

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

regulation 2(1) in accordance with sub-regulation (1), the

Resolution Committee may, for the duration of the

suspension, exercise the power to

(a) restrict secured creditors of an

institution or an entity referred to in paragraphs (b),

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

2(1), from enforcing security interests in relation to

any of the assets of the said institution or entity for

the same duration, in which case regulation 70(2),

(3) and (4) shall apply; and

(b) suspend the termination rights of any

party to a contract with that institution or entity for

the same duration, in which case regulation 71(2)

to (8) shall apply.

(11) Where the Resolution Committee has

exercised the power to suspend payment or delivery

obligations in instances set out in sub-regulations (1) to

(10), after making a determination that an institution or

entity is failing or likely to fail pursuant to paragraph (a)

of article 32(1), and if resolution action is subsequently

taken with respect to the relevant institution or entity, the

Resolution Committee shall not exercise its powers

under regulation 69(1), 70(1) or 71(1) with respect to the

said relevant institution or entity.".

14. Regulation 36 of the principal regulations shall be amended

as follows

(a) in sub-regulation (1) thereof, immediately after the

words "convert relevant capital instruments,", there shall be

added the words "and eligible liabilities in accordance with

regulation 59,";

(b) in paragraph (a) of sub-regulation (4) thereof,

immediately after the words "conversation of capital

instruments", there shall be added the words "and eligible

liabilities in accordance with regulation 59";

(c) paragraph (c) of sub-regulation (4) thereof, shall be

substituted by the following

"(c) when the power to write down or convert

relevant capital instruments and eligible liabilities in

accordance with regulation 59 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 and eligible liabilities in accordance with

regulation 59;";

(d) in paragraph (d) of sub-regulation (4) thereof, the

words "conversion of eligible liabilities;", shall be substituted by

the words "conversion of bail-inable liabilities;";

(e) in paragraph (g) of sub-regulation (4) thereof,

immediately after the words "convert relevant capital

instruments", there shall be added the words "and eligible

liabilities in accordance with regulation 59";

(f) in sub-regulation (5) thereof, immediately after the

words "convert relevant capital instruments", there shall be

added the words "and eligible liabilities in accordance with

regulation 59";

(g) in sub-regulation (12) thereof, immediately after the

words "conversion power of capital instruments", there shall be

added the words "and eligible liabilities in accordance with

regulation 59."; and

(h) in sub-regulation (13) thereof, immediately after the

words "conversion power of capital instruments", there shall be

added the words "and eligible liabilities in accordance with

regulation 59.".

15. Regulation 37 of the principal regulations shall be amended Amends

regulation 37

as follows

of the principal

regulations.

(a) in sub-regulation (2) thereof, immediately after the

words "convert capital instruments", there shall be added the

words "and eligible liabilities"; and

(b) in paragraph (a) of sub-regulation (10) thereof, the

words "and other eligible liabilities;", shall be substituted by the

words "and other bail-inable liabilities;".

16. Regulation 44 of the principal regulations shall be amended Amends

regulation 44 of

as follows

the principal

regulations.

(a) paragraph (f) of sub-regulation (2) thereof, shall be

substituted by the following

"(f) liabilities with a remaining maturity of less than

seven days, owed to systems or operators of systems

designated in accordance with Directive 98/26/EC or to

their participants and arising from the participation in such

a system, or to central counterparties authorised in another

Member State pursuant to Article 14 of Regulation (EU)

No 648/2012 and third-country central counterparties

recognised by ESMA pursuant to Article 25 of the said

Regulation;";

(b) immediately after paragraph (g) of sub-regulation (2)

thereof, there shall be added the following new paragraph

"(h) liabilities to institutions or entities referred to in

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

regulation 2(1) that are part of the same resolution group

without being themselves resolution entities, regardless of

their maturities, except where those liabilities rank below

ordinary unsecured liabilities under article 29A of the

Banking Act

Provided that, in cases where the exception

applies the Resolution Committee is the resolution

authority responsible for the relevant subsidiary that is not

a resolution entity, shall assess whether the amount of

items complying with regulation 45F(2) is sufficient to

support the implementation of the preferred resolution

strategy.";

(c) in the second proviso of sub-regulation (2) thereof,

the words "the extent to which other institutions hold liabilities

eligible for a bail-in tool", shall be substituted by the words "the

extent to which other institutions hold bail-inable liabilities";

(d) the proviso of sub-regulation (3) thereof, shall be

substituted by the following

"Provided that, the Resolution Committee shall

carefully assess whether liabilities to institutions or entities

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

"entity" in regulation 2(1), that are part of the same

resolution group without being themselves resolution

entities and that are not excluded from the applicable write

down and conversion powers under paragraph (h) of sub-

regulation (2), should be excluded or partially excluded

under paragraphs (a) to (d) to ensure effective

implementation of the resolution strategy

Provided further that, where the Resolution

Committee decides to exclude or partially exclude a bail-

inable liability or class of bail-inable liabilities under this

sub-regulation, the level of write down or conversion

applied to other bail-inable liabilities may be increased to

take account of such exclusions, provided that the level of

write down and conversion applied to other bail-inable

liabilities complies with the principle in regulation

34(1)(g)."; and

(e) sub-regulation (4) thereof, shall be substituted by the

following

"(4) Where the Resolution Committee decides to

exclude or partially exclude a bail-inable liability or class

of bail-inable 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 bail-inable 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).";

(f)

in paragraph (a) of sub-regulation (5) thereof, the

words "eligible liabilities" shall be substituted by the words "bail-

inable liabilities".

17. Immediately after regulation 44 of the principal regulations Adds new

there shall be added the following new regulation

(1) Where a seller of eligible liabilities

meets all the conditions referred to in Article 72a of the

CRR with the exception of point (b) of Article 72a(1) and

paragraphs 3 to 5 of Article 72b of that Regulation, the

sale of the eligible liabilities mentioned above to a retail

client as defined in point (11) of Article 4(1) of Directive

2014/65/EU, shall be permitted when the following

conditions are fulfilled

(a) the seller has performed a suitability test

in accordance with Article 25(2) of Directive 2014/

65/EU;

(b) the seller is satisfied, on the basis of the

test referred to in point (a), that such eligible

liabilities are suitable for such retail client;

(c) the seller documents the suitability in

accordance with Article 25(6) of Directive 2014/65/

EU.

(2) Where the conditions laid down in sub-

regulation (1) are fulfilled and the financial instrument

portfolio of such retail client does not, at the time of the

purchase, exceed five hundred thousand euro (€500,000),

the seller shall, on the basis of the information provided

by the retail client in accordance with sub-regulation (3),

ensure that at the time of the purchase, the initial

investment amount invested in one or more liabilities

instruments referred to in sub-regulation (1) is at least ten

thousand euro (€10,000).

(3) The retail client shall provide the seller with

accurate information on the financial instrument portfolio

of the retail client, including any investments in liabilities

referred to in sub-regulation (1).

(4) For the purpose of sub-regulations (2) and (3),

the financial instrument portfolio of the retail client shall,

with the exception of any financial instruments that have

been given as collateral, include cash deposits and

financial instruments.

(5) The provisions of this regulation shall not

apply to liabilities referred to in sub-regulation (1) issued

before 28 th December, 2020.".

18. Regulation 45 of the principal regulations shall be

substituted by the following

(1) Institutions and entities referred to in

paragraphs

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

of the minimum

requirement for

own funds and regulation 2(1) meet, at all times, the requirements for

own funds and eligible liabilities where required by and

in accordance with this regulation and regulations 45A to

(2) The requirement referred to in sub-regulation

(1) shall be calculated in accordance with sub-regulations

(3), (5) and (7) of regulation 45C, as applicable, as the

amount of own funds and eligible liabilities and

expressed as percentages of

(a) the total risk exposure amount of the

relevant entity referred to in sub-regulation (1),

calculated in accordance with Article 92(3) of the

CRR; and

(b) the total exposure measure of the

relevant entity referred to in sub-regulation (1),

calculated in accordance with Articles 429 and

429a of the CRR.".

19. Immediately after regulation 45 of the principal regulations Adds new

regulation 45A

there shall be added the following new regulation

to the principal

regulations.

45A. (1) Notwithstanding regulation 45, the

Resolution Committee shall exempt from the requirement

requirement for

laid down in regulation 45(1) mortgage credit institutions

financed by covered bonds which are not allowed to

receive deposits under Maltese law, provided that all of

the following conditions are met

(a) the mortgage credit institutions will be

wound up in national insolvency proceedings or in

other types of proceedings laid down for those

institutions and implemented in accordance with

regulations 38, 40 or 42; and

(b) the proceedings referred to in paragraph

(a), ensure that creditors of those institutions,

including holders of covered bonds, where relevant,

bear losses in a way that achieves the resolution

objectives.

(2) Institutions exempt from the requirement laid

down in regulation 45(1) shall not form part of the

consolidation referred to in regulation 45E(1).".

20. Immediately after regulation 45A of the principal Adds new

regulation 45B

regulations there shall be added the following new regulation

to the principal

regulations.

45B. (1) Liabilities shall be included in the

amount of own funds and eligible liabilities of resolution

entities only, where they satisfy the conditions referred to

in the following articles of the CRR

(a) Article 72a;

(b) Article 72b, with the exception of point

(d) of paragraph 2; and

(c) Article 72c.

Provided that, by way of derogation from this

sub-regulation, where references to the requirements in

Article 92a or Article 92b of the CRR for the purpose of

those Articles have been made, eligible liabilities shall

consist of eligible liabilities as defined in Article 72k of

the said Regulation and determined in accordance with

Chapter 5a of Title I of Part Two of the said Regulation.

(2) Liabilities that arise from debt instruments

with embedded derivatives, including structured notes,

that satisfy the conditions of paragraph (a) of sub-

regulation (1), with the exception of point (l) of Article

72a(2) of the CRR, shall be included in the amount of

own funds and eligible liabilities when one of the

following conditions is met

(a) the principal amount of the liability

arising from the debt instrument known at the time

of issue, is fixed or increasing, and is not affected

by an embedded derivative feature, and the total

amount of liability arising from the debt instrument,

including the embedded derivative, can be valued

on a daily basis by reference to an active and liquid

two-way market for an equivalent instrument

without credit risk, in accordance with Articles 104

and 105 of the CRR; or

(b) the debt instrument includes a

contractual term that specifies that the value of the

claim in cases of insolvency of the issuer and of the

resolution of the issuer is fixed or increasing, and

does not exceed the initially paid-up amount of the

liability

Provided that, debt instruments referred

to in sub-regulation (2), including their embedded

derivatives, shall not be subject to any netting

agreement and the valuation of such instruments

shall not be subject to regulation 49(3)

Provided further that, the liabilities

referred to in sub-regulation (2), shall only be

included in the amount of own funds and eligible

liabilities with respect to the part of the liability that

corresponds to the principal amount referred to in

sub-regulation (2)(a) or to the fixed or increased

amount referred to in sub-regulation (2)(b).

(3) Where the liabilities are issued by a subsidiary

established in a Member State to an existing shareholder

that is not part of the same resolution group, and that

subsidiary is part of the same resolution group as the

resolution entity, those liabilities shall be included in the

amount of own funds and eligible liabilities of that

resolution entity, provided that all of the following

conditions are met

(a) the liabilities are issued in accordance

with paragraph (a) of regulation 45F(2);

(b) the exercise of the write down or

conversion power in relation to those liabilities in

accordance with regulations 59 or 62 does not affect

the control of the subsidiary by the resolution entity;

(c) those liabilities do not exceed an amount

determined by subtracting

(i) the sum of the liabilities issued to

and bought by the resolution entity either

directly or indirectly through other entities in

the same resolution group and the amount of

own funds issued in accordance with

paragraph (b) of regulation 45F(2) from

(ii) the amount required in accordance

with regulation 45F(1).

(4) Without

prejudice

to the minimum

requirement in regulation 45C(5) or paragraph (a) of

regulation 45D(1), the Resolution Committee shall ensure

that a part of the requirement referred to in regulation 45E

equal to eight per cent of the total liabilities, including

own funds, shall be met by resolution entities that are G-

SIIs or resolution entities that are subject to regulation

45C(5) or (6) using own funds, subordinated eligible

instruments, or liabilities as referred to in sub-regulation

(3). The Resolution Committee may permit that a level

lower than eight per cent of the total liabilities, including

own funds, but greater than the amount resulting from the

application of the formula (1-(X1/X2)) × 8% of the total

liabilities, including own funds, shall be met by resolution

entities that are G-SIIs or resolution entities that are

subject to regulation 45C(5) or (6) using own funds,

subordinated eligible instruments, or liabilities as referred

in sub-regulation (3), provided that all the conditions set

out in Article 72b(3) of the CRR are met, where in light of

the reduction that is possible under Article 72b(3) of the

said Regulation

Provided that, for the purposes of this sub-

regulation X1 = 3.5 per cent of the total risk exposure

amount calculated in accordance with Article 92(3) of the

CRR

Provided further that, for the purposes of this

sub-regulation X2 = the sum of 18 per cent of the total

risk exposure amount calculated in accordance with

Article 92(3) of the CRR and the amount of the combined

buffer requirement

Provided further that, for resolution entities

that are subject to regulation 45C(5), where the

application of this sub-regulation leads to a requirement

greater than 27 per cent of the total risk exposure amount,

for the resolution entity concerned, the Resolution

Committee shall limit the part of the requirement referred

to in regulation 45E which is to be met using own funds,

subordinated eligible instruments, or liabilities as referred

to in sub-regulation (3), to an amount equal to 27 per cent

of the total risk exposure amount, if the Resolution

Committee has assessed that

(a) access to the resolution financing

arrangement is not considered to be an option for

resolving that resolution entity in the resolution

plan; and

(b) where paragraph (a) does not apply, the

requirement referred to in regulation 45E allows

that resolution entity to meet the requirements

referred to in regulation 44(5) or 44(8) as

applicable

Provided further that, in carrying out the

assessment referred to in the first proviso, the

Resolution Committee shall also take into account

the risk of disproportionate impact on the business

model of the resolution entity concerned. For

resolution entities that are subject to regulation

45C(6), the first proviso does not apply.

(5) Where the resolution entities are neither G-

SIIs nor resolution entities that are subject to regulation

45C(5) or (6), the Resolution Committee may decide that

a part of the requirement referred to in regulation 45E up

to the greater of eight per cent of the total liabilities,

including own funds, of the entity and the formula

referred to in sub-regulation (7), shall be met using own

funds, subordinated eligible instruments, or liabilities as

referred to in sub-regulation (3), provided that the

following conditions are met

(a) non-subordinated liabilities referred to in

sub-regulations (1) and (2) have the same priority

ranking in the insolvency hierarchy under article

29A of the Banking Act as certain liabilities that are

excluded from the application of write down and

conversion powers in accordance with regulation

44(2) or (3);

(b) there is a risk that, as a result of a

planned application of write-down and conversion

powers to non-subordinated liabilities that are not

excluded from the application of write down and

conversion powers in accordance with regulation

44(2) or (3), creditors whose claims arise from those

liabilities incur greater losses than they would incur

in a winding- up under normal insolvency

proceedings; and

(c) the amount of own funds and other

subordinated liabilities does not exceed the amount

necessary to ensure that the creditors referred to

paragraph (b) do not incur losses above the level of

losses that they would otherwise have incurred in

the winding-up under normal insolvency

proceedings

Provided that, where the Resolution

Committee determines that, within a class of

liabilities which includes eligible liabilities, the

amount of the liabilities that are excluded or

reasonably likely to be excluded from the

application of write down and conversion powers in

accordance with regulation 44(2) or (3) totals more

than ten per cent of that class, the Resolution

Committee shall assess the risk referred to in

paragraph (b).

(6) For the purposes of sub-regulations (4), (5)

and (7), derivative liabilities shall be included in total

liabilities on the basis that full recognition is given to

counterparty netting rights

Provided that, the own funds of a resolution

entity that are used to comply with the combined buffer

requirement shall be eligible to comply with the

requirements referred to in sub-regulations (4), (5) and

(7) By derogation from sub-regulation (4), the

Resolution Committee may decide that the requirement

referred to in regulation 45E shall be met by resolution

entities that are G-SIIs or resolution entities that are

subject to regulation 45C(5) or (6) using own funds,

subordinated eligible instruments, or liabilities as referred

to in sub-regulation (3), to the extent that, due to the

obligation of the resolution entity to comply with the

combined buffer requirement and the requirements

referred to in Article 92a of the CRR, regulations 45C(5)

and 45E, the sum of those own funds, instruments and

liabilities does not exceed the greater of

(a) 8 per cent of the total liabilities,

including own funds, of the entity; or

(b) the amount resulting from the

application of the formula Ax2+Bx2+C

Where: A = the amount resulting from

the requirement referred to in point (c) of

Article 92(1) of the CRR;

Where

B = the amount resulting

from the requirement referred to in Article

104a of the CRD;

Where: C = the amount resulting from

the combined buffer requirement.

(8) The Resolution Committee may exercise the

power referred to in sub-regulation (7), with respect to

resolution entities that are G-SIIs or that are subject to

regulation 45C(5) or (6), and that meet one of the

conditions set out in the first proviso, up to a limit of

hundred per cent of the total number of all resolution

entities that are G-SIIs or that are subject to regulation

45C(5) or (6) for which the Resolution Committee

determines the requirement referred to in regulation 45E

Provided that, the conditions shall be

considered by the Resolution Committee as follows

(a) substantive impediments to resolvability

have been identified in the preceding resolvability

assessment and either

(i) no remedial action has been taken

following the application of the measures

referred to in regulation 17(5) in the timeline

required by the Resolution Committee, or

(ii) the

identified

substantive

impediments cannot be addressed using any of

the measures referred to in regulation 17(5),

and the exercise of the power referred to in

sub-regulation (7) of this regulation would

partially or fully compensate for the negative

impact of the substantive impediments on

resolvability;

(b) the Resolution Committee considers that

the feasibility and credibility of the resolution

entity's preferred resolution strategy is limited,

taking into account the entity's size, its

interconnectedness, the nature, scope, risk and

complexity of its activities, its legal status and its

shareholding structure; or

(c) the requirement referred to in Article

104a of the CRD reflects the fact that the resolution

entity that is a G-SII or that is subject to regulation

45C(5) or (6) is, in terms of riskiness, among the top

twenty per cent of institutions for which the

Resolution Committee determines the requirement

referred to in regulation 45(1)

Provided further that, for the purposes of

the percentages referred to in this sub-regulation,

the Resolution Committee shall round the number

resulting from the calculation up to the closest

whole number.

(9) The Resolution Committee shall take the

decisions referred to in sub-regulations (5) or (7) after

consulting the Authority

Provided that, when taking those decisions,

the Resolution Committee shall take into account

(a) the depth of the market for the resolution

entity’s own funds instruments and subordinated

eligible instruments, the pricing of such

instruments, where they exist, and the time needed

to execute any transactions necessary for the

purpose of complying with the decision;

(b) the amount of eligible liabilities

instruments that meet all of the conditions referred

to in Article 72a of CRR that have a residual

maturity below one year as of the date of the

decision, with a view to making quantitative

adjustments to the requirements referred to in sub-

regulations (5) and (7);

(c) the availability and the amount of

instruments that meet all of the conditions referred

to in Article 72a of the CRR with the exception of

point (d) of Article 72b(2) of the said Regulation;

(d) whether the amount of liabilities that are

excluded from the application of write down and

conversion powers in accordance with regulation

44(2) or (3) and that, in normal insolvency

proceedings, rank equally with or below the highest

ranking eligible liabilities is significant in

comparison to the own funds and eligible liabilities

of the resolution entity. Where the amount of

excluded liabilities does not exceed five per cent of

the amount of the own funds and eligible liabilities

of the resolution entity, the excluded amount shall

be considered as not being significant. Above that

threshold, the significance of the excluded liabilities

shall be assessed by the Resolution Committee;

(e) the resolution entity’s business model,

funding model, and risk profile, as well as its

stability and ability to contribute to the economy;

and

(f) the impact of possible restructuring costs

on the resolution entity’s recapitalisation.".

21. Immediately after regulation 45B of the principal

regulations there shall be added the following new regulation

45C. (1) The Resolution Committee shall, after

consulting

the Authority, determine the requirement

referred to in regulation 45(1) on the basis of the

following criteria

(a) the need to ensure that the resolution

group can be resolved by the application of the

resolution tools to the resolution entity, including,

where appropriate, the bail-in tool, in a way that

meets the resolution objectives;

(b) the need to ensure, where appropriate,

that the resolution entity and its subsidiaries that are

institutions or entities referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1)

but are not resolution entities have sufficient own

funds and eligible liabilities to ensure that, if the

bail-in tool or write down and conversion powers,

were to be applied to the resolution entity and its

subsidiaries, losses could be absorbed and that it is

possible to restore the total capital ratio and, as

applicable, the leverage ratio, of the relevant entities

to a level necessary to enable them to continue to

comply with the conditions for authorisation and to

carry on the activities for which they are authorised

under the CRD or Directive 2014/65/EU;

(c) the need to ensure, if the resolution plan

anticipates the possibility for certain classes of

eligible liabilities to be excluded from bail-in

pursuant to regulation 44(3) or to be transferred in

full to a recipient under a partial transfer, that the

resolution entity has sufficient own funds and other

eligible liabilities to absorb losses and to restore its

total capital ratio and, as applicable, its leverage

ratio, to the level necessary to enable it to continue

to comply with the conditions for authorisation and

to carry on the activities for which it is authorised

under the CRD or Directive 2014/65/EU;

(d) the size, the business model, the funding

model and the risk profile of the entity; and

(e) the extent to which the failure of the

entity would have adverse effect of the financial

stability, including through contagion to other

institutions or entities, due to the interconnectedness

of the entity with those other institutions or entities

or with the rest of the financial system.

(2) Where the resolution plan provides that

resolution action is to be taken or that the power to write

down and convert relevant capital instruments and

eligible liabilities, in accordance with regulation 59, is to

be exercised in accordance with the relevant scenario

referred to in regulation 10(3), the requirement referred to

in regulation 45(1) shall equal an amount sufficient to

ensure that

(a) the losses that are expected to be

incurred by the entity are fully absorbed; and

(b) the resolution entity and its subsidiaries

that are institutions or entities referred to in

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

regulation 2(1) but are not resolution entities, are

recapitalised to a level necessary to enable them to

continue to comply with the conditions for

authorisation and to carry on the activities for which

they are authorised under the CRD, Directive 2014/

65/EU or an equivalent legislative act for an

appropriate period not longer than one year

Provided that, where the resolution plan

provides that the entity is to be wound up under

normal insolvency proceedings, the Resolution

Committee shall assess whether it is justified to

limit the requirement referred to in regulation 45(1)

for that entity, so that it does not exceed an amount

sufficient to absorb losses in accordance with

paragraph (a)

Provided further that, the assessment by

the Resolution Committee shall, in particular,

evaluate the limit referred to in paragraph (b) as

regards any possible impact on financial stability

and on the risk of contagion to the financial system.

(3) For resolution entities, the amount referred to

in paragraph (a) of regulation 45C(2) shall be the

following

(a) for the purpose of calculating the

requirement referred to in regulation 45(1), in

accordance with paragraph (a) of regulation 45(2),

the sum of

(i) the amount of losses to be absorbed

in resolution that corresponds to the

requirements referred to in point (c) of Article

92(1) of the CRR and Article 104a of the CRD

Directive 2013/36/EU at the consolidated

resolution group level; and

(ii) a recapitalisation amount that

allows the resolution group resulting from

resolution to restore compliance with its total

capital ratio requirement referred to in point

(c) of Article 92(1) of Regulation (EU) No

575/2013 and its requirement referred to in

Article 104a of Directive 2013/36/EU at the

consolidated resolution group level, after the

implementation of the preferred resolution

strategy; and

(b) for the purpose of calculating the

requirement referred to in regulation 45(1), in

accordance with paragraph (b) of regulation 45(2),

the sum of

(i) the amount of the losses to be

absorbed in resolution that corresponds to the

resolution entity’s leverage ratio requirement

referred to in point (d) of Article 92(1) of the

CRR at the consolidated resolution group

level; and

(ii) a recapitalisation amount that

allows the resolution group resulting from

resolution to restore compliance with the

leverage ratio requirement referred to in point

(d) of Article 92(1) of the CRR at the

consolidated resolution group level, after the

implementation of the preferred resolution

strategy

Provided that, for the purposes of

paragraph (a) of regulation 45(2), the requirement

referred to in regulation 45(1) shall be expressed in

percentage terms as the amount calculated in

accordance with paragraph (a), divided by the total

risk exposure amount

Provided further that, for the purposes of

paragraph (b) of regulation 45(2), the requirement

referred to in regulation 45(1) shall be expressed in

percentage terms as the amount calculated in

accordance with paragraph (b) of this sub-

regulation, divided by the total exposure measure.

Provided further that, when setting the

individual requirement provided for in paragraph

(b), the Resolution Committee shall take into

account the requirements referred to in regulations

37(10), 44(5) and (8).

(4) (a) When setting the recapitalisation

amounts referred to in sub-regulation (3), the Resolution

Committee shall

(i) use the most recently reported values for

the relevant total risk exposure amount or total

exposure measure, adjusted for any changes

resulting from resolution actions set out in the

resolution plan; and

(ii) after consulting the Authority, adjust the

amount corresponding to the current requirement

referred to in Article 104a of the CRD downwards

or upwards to determine the requirement that is to

apply to the resolution entity after the

implementation of the referred resolution strategy.

(b) The Resolution Committee shall be able to

increase the requirement provided in paragraph (a)(ii) of

sub-regulation (3) by an appropriate amount necessary to

ensure that, following resolution, the entity is able to

sustain sufficient market confidence for an appropriate

period, which shall not exceed one year.

(c) Where paragraph (a) of this sub-regulation

applies, the amount referred therein shall be equal to the

combined buffer requirement that is to apply after the

application of the resolution tools, less the amount

referred to in paragraph (a) of point (6) of Article 128 of

the CRD.

(d) The amount referred to in paragraph (a) of this

sub-regulation shall be adjusted downwards if, after

consulting the Authority, the Resolution Committee

determines that it would be feasible and credible for a

lower amount to be sufficient to sustain market

confidence and to ensure both the continued provision of

critical economic functions by the institution or entity

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

"entity" in regulation 2(1), and its access to funding

without recourse to extraordinary public financial support,

with the exception of contributions from resolution

financing arrangements, in accordance with regulation

44(5) and (8) and regulation 101(2), following the

implementation of the resolution strategy

Provided that, the said amount shall be

adjusted upwards if, after consulting the Authority, the

Resolution Committee determines that a higher amount is

necessary to sustain sufficient market confidence and to

ensure both the continued provision of critical economic

functions by the institution or entity referred to in

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

regulation 2(1), and its access to funding without recourse

to extraordinary public financial support, with the

exception of contributions from resolution financing

arrangements, in accordance with regulations 44(5) and

(8) and regulation 101(2), for an appropriate period which

shall not exceed one year.

(5) For resolution entities that are not subject to

Article 92a of the CRR and that are part of a resolution

group, the total assets of which exceed EUR 100 billion,

the level of the requirement referred to in sub-regulation

(3) shall be at least equal to

(a) 13.5 per cent when calculated in

accordance with paragraph (a) of regulation 45(2);

and

(b) 5 per cent when calculated in accordance

with paragraph (b) of regulation 45(2).

Provided that, by way of derogation from

regulation 45B, the resolution entities referred to in this

sub-regulation shall meet a level of the requirement

referred to in this sub-regulation that is equal to 13.5 per

cent when calculated in accordance with paragraph (a) of

regulation 45(2) and to 5 per cent when calculated in

accordance with paragraph (b) of regulation 45(2) using

own funds, subordinated eligible instruments, or liabilities

as referred to in regulation 45B(3).

(6) The Resolution Committee may, after

consulting the Authority, decide to apply the requirements

laid down in sub-regulation (5), to a resolution entity

which is not subject to Article 92a of the CRR and which

is part of a resolution group, the total assets of which are

lower than EUR 100 billion and which the Resolution

Committee has assessed as reasonably likely to pose a

systemic risk in the event of its failure

Provided that, when taking a decision as

referred to in this sub-regulation, the Resolution

Committee shall take into account

(a) the prevalence of deposits, and the

absence of debt instruments, in the funding model;

(b) the extent to which access to the capital

markets for eligible liabilities is limited;

(c) the extent to which the resolution entity

relies on Common Equity Tier 1 capital to meet the

requirement referred to in regulation 45E

Provided further that, the absence of a decision

pursuant to this sub-regulation is without prejudice to any

decision under regulation 45B(5).

(7) For entities that are not themselves resolution

entities, the amount referred to in sub-regulation (2) shall

be the following

(a) for the purpose of calculating the

requirement referred to in regulation 45(1), in

accordance with paragraph (a) of regulation 45(2),

the sum of

(i) the amount of the losses to be

absorbed that corresponds to the requirements

referred to in point (c) of Article 92(1) of the

CRR and Article 104a of the CRD of the

entity; and

(ii) a recapitalisation amount that

allows the entity to restore compliance with its

total capital ratio requirement referred in point

(c) of Article 92(1) of the CRR and its

requirement referred to in Article 104a of the

CRD, after the exercise of the power to write

down or convert relevant capital instruments

and eligible liabilities in accordance with

regulation 59, or after the resolution of the

resolution group; and

(b) for the purpose of calculating the

requirement referred to in regulation 45(1), in

accordance with paragraph (b) of regulation 45(2),

the sum of

(i) the amount of the losses to be

absorbed that corresponds to the entity’s

leverage ratio requirement referred to in point

(d) of Article 92(1) of the CRR; and

(ii) a recapitalisation amount that

allows the entity to restore compliance with its

leverage ratio requirement referred to in point

(d) of Article 92(1) of the CRR after the

exercise of the power to write down or convert

relevant capital instruments and eligible

liabilities in accordance with regulation 59, or

after the resolution of the resolution group

Provided that, for the purposes of

paragraph (a) of regulation 45(2), the requirement

referred to in regulation 45(1) shall be expressed in

percentage terms as the amount calculated in

accordance with paragraph (a) divided by the total

risk exposure amount

Provided further that, for the purposes of

paragraph (b) of regulation 45(2), the requirement

referred to in regulation 45(1) shall be expressed in

percentage terms as the amount calculated in

accordance with paragraph (b) divided by the total

exposure measure.

(8) (a) The Resolution Committee shall, when

setting the individual requirement provided in paragraph

(b) of sub-regulation (7) take into account the

requirements referred to in regulations 37(10), 44(5) and

44(8).

(b) For the purpose of setting the

recapitalisation amounts referred to in sub-regulation (7),

the Resolution Committee shall

(i) use the most recently reported values for

the relevant total risk exposure amount or total

exposure measure, adjusted for any changes

resulting from actions set out in the resolution plan;

and

(ii) after consulting the Authority, adjust the

amount corresponding to the current requirement

referred to in Article 104a of the CRD downwards

or upwards to determine the requirement that is to

apply to the relevant entity, after the exercise of the

power to write down or convert relevant capital

instruments and eligible liabilities, in accordance

with regulation 59, or after the resolution of the

resolution group.

(c) The Resolution Committee may increase the

requirement provided in paragraph (a)(i) of sub-regulation

(7) by an appropriate amount necessary to ensure that,

following the exercise of the power to write down or

convert relevant capital instruments and eligible liabilities

in accordance with regulation 59, the entity is able to

sustain sufficient market confidence for an appropriate

period which shall not exceed one year.

(d) Where paragraph (c) of this sub-regulation

applies, the amount referred to in the said paragraph (c)

shall be equal to the combined buffer requirement that is

to apply after the exercise of the power referred to in

regulation 59, or after the resolution of the resolution

group, less the amount referred to in paragraph (a) of

point (6) of Article 128 of the CRD.

(e) The amount referred to in paragraph (c) shall

be adjusted downwards if, after consulting the Authority,

the Resolution Committee determines that it would be

feasible and credible for a lower amount to be sufficient to

ensure market confidence, and to ensure both the

continuous provision of critical economic functions by the

institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1), and its access

to funding without recourse to extraordinary public

financial support, with the exception of contributions

from resolution financing arrangements, in accordance

with regulations 44(5) and 44(8) and regulation 101(2),

after the exercise of the power referred to in regulation 59,

or after the resolution of the resolution group

Provided that, the amount shall be adjusted

upwards if, after consulting the Authority, the Resolution

Committee determines that a higher amount is necessary

to sustain sufficient market confidence and to ensure both

continued provision of critical economic functions by the

institution or entity referred to in paragraphs (b), (c) or (d)

of the definition "entity" in regulation 2(1), and its access

to funding without recourse to extraordinary public

financial support, with the exception of contributions

from resolution financing arrangements, in accordance

with regulations 44(5) and 44(8) and regulation 101(2) for

an appropriate period which shall not exceed one year.

(9) Where the Resolution Committee expects that

certain classes of eligible liabilities are reasonably likely

to be fully or partially excluded from bail-in pursuant to

regulation 44(3), or might be transferred in full to a

recipient under a partial transfer, the requirement referred

to in regulation 45(1) shall be met using own funds or

other eligible liabilities that are sufficient to

(a) cover the amount of excluded liabilities

identified in accordance with regulation 44(3); and

(b) ensure that the conditions referred to in

sub-regulation (2) are fulfilled.

(10) Any decision by the Resolution Committee to

impose a minimum requirement of own funds and eligible

liabilities under this regulation shall contain the reasons

for that decision, including a full assessment of the

elements referred to in sub-regulations (2) to (9), and shall

be reviewed by the Resolution Committee without undue

delay to reflect any changes in the level of the

requirement referred to in Article 104a of the CRD.

(11) For the purposes of sub-regulation (3) and (7),

capital requirements shall be interpreted in accordance

with the Authority’s application of the transitional

provisions laid down in Chapters 1, 2 and 4 of Title 1 of

Part Ten of the CRR and in the provisions laid down in

Maltese law exercising the options granted to the

Authority by the said Regulation.".

22. Immediately after regulation 45C of the principal Adds new

regulation 45D

regulations there shall be added the following new regulation

to the principal

regulation.

45D. (1) The requirement referred to in regulation

"Determination

of the minimum

requirement for 45(1) for a resolution entity that is a G-SI or part of a G-

SII shall consist of the following

(a) The requirement referred to in Articles

92a and 494 of the CRR; and

(b) any additional requirement for own

funds

and eligible liabilities that has been

non-EU G-SIIs.

determined by the Resolution Committee

specifically in relation to that entity in accordance

with sub-regulation (3).

(2) The requirement referred to in regulation 45(1)

for a Union material subsidiary of a non-EU G-SII shall

consist of the following

(a) the requirements referred to in Articles

92b and 494 of Regulation (EU) No 575/2013; and

(b) any additional requirement for own

funds and eligible liabilities that has been

determined by the Resolution Committee

specifically in relation to that material subsidiary in

accordance with sub-regulation (3), which is to be

met using own funds and liabilities that meet the

conditions of regulations 45F and 89(2).

(3) The Resolution Committee shall impose an

additional requirement for own funds and eligible

liabilities referred to in sub-regulation (1)(b) and sub-

regulation (2)(b) only

(a) where the requirement referred to in

paragraph (a) of sub-regulation (1) or paragraph (a)

of sub-regulation (2) is not sufficient to fulfil the

conditions set out in regulation 45C; and

(b) to an extent that ensures that the

conditions set out in regulation 45C are fulfilled.

(4) For the purposes of regulation 45H(2), where

more than one G-SII entity belonging to the same G-SII

are resolution entities, the relevant European resolution

authorities shall calculate the amount referred to in sub-

regulation (3)

(a) for each resolution entity;

(b) for the Union parent entity as if it was

the only resolution entity of the G-SII.

(5) Any decision by the Resolution Committee to

impose an additional requirement for own funds and

eligible liabilities under sub-regulation (1)(b) or sub-

regulation (2)(b) shall contain the reasons for that

decision, including a full assessment of the elements

referred to in sub-regulation (3), and shall be reviewed by

the Resolution Committee without undue delay to reflect

any changes in the level of the requirement referred to in

Article 104a of the CRD that applies to the resolution

group or the Union material subsidiary of a non-EU G-

SII.".

23. Immediately after regulation 45D of the principal

regulations there shall be added the following new regulation

45E. (1) Resolution entities shall comply with the

"Application of

requirements laid down in regulation 45B to regulation

requirement for

45D on a consolidated basis at the level of the resolution

group.

(2) The Resolution Committee shall determine the

requirement referred to in regulation 45(1) for a

resolution entity at the consolidated resolution group

level in accordance with regulation 45H, on the basis of

the requirements laid down in regulations 45B to 45D and

on the basis of whether the third-country subsidiaries of

the group are to be resolved separately under the

resolution plan.

(3) For resolution groups identified in accordance

with paragraph (b) of the definition "resolution group" in

regulation 2(1), the relevant European resolution

authority shall decide, depending on the features of the

solidarity mechanism and of the preferred resolution

strategy, which entities in the resolution group are to be

required to comply with regulation 45C(3) and (5) and

regulation 45D(1), in order to ensure that the resolution

group as a whole complies with sub-regulations (1) and

(2) and how such entities are to do so in conformity with

the resolution plan.".

24. Immediately after regulation 45E of the principal Adds new

regulations there shall be added the following new regulation

45F. (1) (a)Institutions that are subsidiaries of a

resolution entity or of a third-country entity, but are not

themselves resolution entities, shall comply with the

requirements laid down in regulation 45C on an individual

liabilities to basis.

(b) The Resolution Committee may, after

themselves consulting the Authority, decide to apply the requirement

laid down in this regulation to an entity referred to in

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

regulation 2(1) that is a subsidiary of a resolution entity but

is not itself a resolution entity.

(c) By way of derogation from paragraph (a),

Union parent undertakings that are not themselves

resolution entities, but are subsidiaries of third-country

entities, shall comply with the requirements laid down in

regulations 45C and 45D on a consolidated basis.

(d) For resolution groups identified in

accordance with paragraph (b) of the definition "resolution

group" in regulation 2(1), those credit institutions which are

permanently affiliated to a central body, but are not

themselves resolution entities, a central body which is not

itself a resolution entity, and any resolution entities that are

not subject to a requirement under regulation 45E(3), shall

comply with regulation 45C(7) on an individual basis.

(e) The requirement referred to in regulation

45(1) for any entity referred to in this sub-regulation, shall

be determined in accordance with regulations 45H and 89,

where applicable, and on the basis of the requirements laid

down in regulation 45C.

(2) The requirement referred to in regulation 45(1)

for entities referred to in sub-regulation (1), shall be met

using one or more of the following

(a) liabilities

(i) that are issued to and bought by the

resolution entity, either directly or indirectly

through other entities in the same resolution

group that bought the liabilities from the entity

that is subject to this regulation, or are issued to

and bought by an existing shareholder that is not

part of the same resolution group, as long as the

exercise of write down or conversion powers in

accordance with regulations 59 to 62, does not

affect the control of the subsidiary by the

resolution entity;

(ii) that fulfil the eligibility criteria

referred to in Article 72a of the CRR, except for

points (b), (c), (k), (l) and (m) of Article 72b(3)

to (5) of the said Regulation;

(iii) that

in

normal

insolvency

proceedings, rank below liabilities that do not

meet the condition referred to in paragraph (a)(i)

and that are not eligible for own funds

requirements;

(iv) that are subject to write down or

conversion powers in accordance with

regulations 59 to 62, in a manner that is

consistent with the resolution strategy of the

resolution group, in particular by not affecting

the control of the subsidiary by the resolution

entity;

(v) the acquisition of ownership of

which is not funded directly or indirectly by the

entity that is subject to this regulation;

(vi) the provisions governing which do

not indicate explicitly or implicitly that the

liabilities would be called, redeemed, repaid or

repurchased early, as applicable, by the entity

that is subject to this regulation, with the

exception of the case of insolvency or

liquidation of that entity, and the said entity

does not otherwise provide such an indication;

(vii) the provisions governing which do

not give the holder the right to accelerate the

future scheduled payment of interest or

principal, with the exception of the case of

insolvency or liquidation of the entity that is

subject to this regulation;

(viii) the level of interest or dividend

payments, as applicable, due thereon is not

amended on the basis of the credit standing of

the entity that is subject to this regulation or its

parent undertaking;

(b) own funds, through

(i) Common Equity Tier 1 capital, and

(ii) other own funds that

- are issued to and bought by entities

that are included in the same resolution

group, or

- are issued to and bought by entities

that are not included in the same

resolution group as long as the exercise of

write down or conversion powers in

accordance with regulations 59 to 62, does

not affect the control of the subsidiary by

the resolution entity.

(3) Where the Resolution Committee is responsible

for a subsidiary that is not a resolution entity, the

Resolution Committee may waive the application of this

regulation to that subsidiary where

(a) both the subsidiary and the resolution

entity are established in Malta and are part of the

same resolution group;

(b) the resolution entity complies with the

requirement referred to in regulation 45E;

(c) there is no current or foreseen material

practical or legal impediment to the prompt transfer

of own funds or repayment of liabilities by the

resolution entity to the subsidiary in respect of which

a determination has been made in accordance with

regulation 59(3), in particular where resolution action

is taken in respect of the resolution entity;

(d) the resolution entity 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;

(e) the risk evaluation, measurement and

control procedures of the resolution entity cover the

subsidiary;

(f) the resolution entity holds more than

50per cent 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

management body of the subsidiary.

(4) Where the Resolution Committee is responsible

for a subsidiary that is not a resolution entity, the

Resolution Committee may waive the application of this

regulation to such subsidiary where

(a) both the subsidiary and its parent

undertaking are established in Malta and are part of

the same resolution group;

(b) the parent undertaking complies on a

consolidated basis with the requirement referred to in

regulation 45(1) in Malta;

(c) there is no current or foreseen material

practical or legal impediment to the prompt transfer

of own funds or repayment of liabilities by the parent

undertaking to the subsidiary in respect of which a

determination has been made in accordance with

regulation 59(3), in particular where resolution action

or powers referred to in regulation 59(1) are taken in

respect of the parent undertaking;

(d) 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;

(e) the risk evaluation, measurement and

control procedures of the parent undertaking cover

the subsidiary;

(f) the parent undertaking holds more than 50

per cent 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 management

body of the subsidiary.

(5) Where the conditions laid down in paragraphs

(a) and (b) of sub-regulation (3) are met, the Resolution

Committee responsible of a subsidiary may permit the

requirement referred to in regulation 45(1), to be met in full

or in part with a guarantee provided by the resolution entity,

which fulfils the following conditions

(a) the guarantee is provided for at least an

amount that is equivalent to the amount of the

requirement for which it substitutes;

(b) the guarantee is triggered when the

subsidiary is unable to pay its debts or other liabilities

as they fall due, or a determination has been made in

accordance with regulation 59(3) in respect of the

subsidiary, whichever is the earliest;

(c) the guarantee is collateralised through a

financial collateral arrangement as defined in point

(a) of Article 2(1) of Directive 2002/47/EC for at

least 50 per cent of its amount;

(d) the collateral backing the guarantee fulfils

the requirements of Article 197 of the CRR, which

following appropriately conservative haircuts, is

sufficient to cover the amount collateralised as

referred to in paragraph (c);

(e) the collateral backing the guarantee is

unencumbered and, in particular, is not used as

collateral to back any other guarantee;

(f) the collateral has an effective maturity that

fulfils the same maturity condition as that referred to

in Article 72c(1) of the CRR; and

(g) there are no legal, regulatory or

operational barriers to the transfer of the collateral

from the resolution entity to the relevant subsidiary,

including where resolution action is taken in respect

of the resolution entity

Provided that, for the purposes of

paragraph (g), at the request of the Resolution

Committee, the resolution entity shall provide an

independent written and reasoned legal opinion or

shall otherwise satisfactorily demonstrate that there

are no legal, regulatory or operational barriers to the

transfer of collateral from the resolution entity to the

relevant subsidiary."

25. Immediately after regulation 45F of the principal

regulations there shall be added the following new regulation

45G. The Resolution Committee may partially or

fully waive the application of regulation 45F, in

respect of a central body or of a credit institution

which is permanently affiliated to a central body,

where all of the following conditions are met

(a) the credit institution and the central

body that are subject to supervision by the

Authority, are established in Malta and are part

of the same resolution group;

(b) the commitments of the central body

and its permanently affiliated credit institutions

are joint and several liabilities, or the

commitments of its permanently affiliated credit

institutions are entirely guaranteed by the central

body;

(c) the minimum requirement for own

funds and eligible liabilities and the solvency

and liquidity of the central body and of all the

permanently affiliated credit institutions, are

monitored as a whole on the basis of the

consolidated accounts of those institutions;

(d) in the case of a waiver for a credit

institution which is permanently affiliated to a

central body, the management of the central body

is empowered to issue instructions to the

management of the permanently affiliated

institutions;

(e) the relevant resolution group

complies with the requirement referred to in

regulation 45E(3); and

(f) there is no current or foreseen

material practical or legal impediment to the

prompt transfer of own funds or repayment of

liabilities between the central body and the

permanently affiliated credit institutions in the

event of resolution."

26. Immediately after regulation 45G of the principal Adds new

regulations there shall be added the following new regulation

45H. (1) The Resolution Committee where it is

the resolution authority of the resolution entity together

with the group-level resolution authority, where different

eligible liabilities . from the former, and the European resolution authorities

responsible for the subsidiaries of a resolution group that

are subject to the requirement referred to in regulation

45F on an individual basis, shall do everything within

their power to reach a joint decision on

(a) the amount of the requirement applied

at the consolidated resolution group level for each

resolution entity; and

(b) the amount of the requirement applied

on an individual basis to each entity of a resolution

group which is not a resolution entity.

Provided that, the joint decision shall ensure

compliance with regulations 45E and 45F and it shall be

fully reasoned and provided to

(a) the resolution entity by the Resolution

Committee or its European resolution authority;

(b) the entities of a resolution group which

are not a resolution entity by the Resolution

Committee or the relevant European resolution

authorities of those entities;

(c) the Union parent undertaking of the

group by the Resolution Committee or the

European resolution authority of the resolution

entity, when that Union parent undertaking is not

itself a resolution entity from the same resolution

group

Provided further that, the joint decision taken

in accordance with this regulation may provide that,

where consistent with the resolution strategy and

sufficient instruments complying with regulation 45F(2)

have not been bought directly or indirectly by the

resolution entity, the requirements referred to in

regulation 45C(7) are partially met by the subsidiary in

compliance with regulation 45F(2) with instruments

issued to and bought by entities not belonging to the

resolution group.

(2) The Resolution Committee and the European

resolution authorities referred to in sub-regulation (1)

shall, where more than one G-SII entity belonging to the

same G-SII are resolution entities, discuss and where

appropriate and consistent with the G-SII's resolution

strategy, agree on the application of Article 72e of the

CRR and any adjustment to minimise or eliminate the

difference between the sum of the amounts referred to in

point (a) of Article 45d(4) and Article 12 of the said

CRR for individual resolution entities and the sum of the

amounts referred to in point (b) of Article 45d(4) and

Article 12 of the said CRR

Provided that, the adjustment mentioned

above may be applied on condition that

(a) the adjustment may be applied in

respect of differences in the calculation of the total

risk exposure amounts between the relevant

Member States by adjusting the level of the

requirement; and

(b) the adjustment shall not be applied to

eliminate differences resulting from exposures

between resolution groups

Provided further that, the sum of the

amounts referred to in paragraph (a) of regulation

45D(4) and Article 12 of the CRR for individual

resolution entities shall not be lower than the sum

of the amounts referred to in paragraph (b) of

regulation 45D(4) and Article 12 of the said CRR.

(3) In the absence of such a joint decision within

four months, a decision shall be taken in accordance with

sub-regulations (4) to (6).

(4) (a) Where a joint decision is not taken

within four months because of a disagreement

concerning a consolidated resolution group requirement

referred to in regulation 45E, a decision shall be taken on

that requirement by the Resolution Committee or the

European resolution authority responsible for the

resolution entity after having duly taken into account

(i) the assessment of entities of the

resolution group that are not a resolution entity,

performed by the relevant European resolution

authorities;

(ii) the opinion of the group-level

resolution authority, where different from the

resolution authority of the resolution entity.

(b) The Resolution Committee or the European

resolution authority of the resolution entity shall where,

at the end of the four-month period, any of the European

resolution authorities concerned has referred the matter

to the EBA in accordance with Article 19 of Regulation

(EU) No 1093/2010, defer its decision and await any

decision that the EBA may take in accordance with

Article 19(3) of the said Regulation, and shall take its

decision in accordance with the decision of the EBA

Provided that, the decision of the EBA shall

take into account paragraphs (a) and (b) of this sub-

regulation. The four-month period shall be deemed to be

the conciliation period within the meaning of Regulation

(EU) No 1093/2010

Provided further that, 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, and that

in the absence of an EBA decision within one month of

the referral of the matter, the decision of the Resolution

Committee or of the relevant European resolution

authority of the resolution entity shall apply.

(5) (a) Where a joint decision is not taken

within four months because of a disagreement

concerning the level of the requirement referred to in

regulation 45F to be applied to any entity of a resolution

group on an individual basis, the decision shall be taken

by the Resolution Committee or the relevant European

resolution authority of the said entity, where all of the

following conditions are fulfilled

(i) the views and reservations expressed in

writing by the European resolution authority of the

resolution entity have been duly taken into

account; and

(ii) where the group-level resolution

authority is different from the resolution authority

of the resolution entity, the views and reservations

expressed in writing by the group-level resolution

authority have been duly taken into account.

(b) Where, at the end of the four-month period,

the resolution authority of the resolution entity or the

group-level resolution authority has referred the matter

to EBA in accordance with Article 19 of Regulation

(EU) No 1093/2010, the resolution authorities

responsible for the subsidiaries on an individual basis

shall defer their decisions and await any decision that

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

said Regulation, and shall take their decisions in

accordance with the decision of EBA

Provided that, the four-month period shall be

deemed to be the conciliation period within the meaning

of Regulation (EU) No 1093/2010

Provided further that, 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

(c) The relevant European resolution authority of

the resolution entity or the group-level resolution

authority shall not refer the matter to the EBA for

binding mediation where the level set by the resolution

authority of the subsidiary

(a) is within 2 per cent of the total risk

exposure amount calculated in accordance with

Article 92(3) of the CRR of the requirement

referred to in regulation 45E; and

(b) complies with regulation 45C(7)

Provided that, in the absence of an EBA

decision within one month, the decisions of the

resolution authorities of the subsidiaries shall apply

Provided further that, the joint decision and

any decisions taken in the absence of a joint decision

shall be reviewed and where relevant, updated on a

regular basis .

(6) Where a joint decision is not taken within

four months because of a disagreement concerning the

level of the consolidated resolution group requirement

and the level of the requirement to be applied to the

resolution group’s entities on an individual basis, the

following shall apply

(a) a decision shall be taken on the level of

the requirement to be applied to the resolution

group's subsidiaries on an individual basis in

accordance with sub-regulation (5);

(b) a decision shall be taken on the level of

the consolidated resolution group requirement in

accordance with sub-regulation (4).

(7) The joint decision referred to in sub-

regulation (1) and any decisions taken by the resolution

authorities referred to in sub-regulations (4), (5) and (6),

in the absence of a joint decision shall be binding on the

resolution authorities concerned

Provided that, the joint decision and any

decisions taken in the absence of a joint decision shall be

reviewed and where relevant, updated on a regular basis.

(8) The Resolution Committee, in coordination

with the Authority shall require and verify that entities

meet the requirement referred to in regulation 45(1), and

shall take any decision pursuant to this regulation in

parallel with the development and the maintenance of

resolution plans.".

27. Immediately after regulation 45H of the principal Adds new

regulations there shall be added the following new regulation

45I. (1) Institutions and entities referred to in

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

public disclosure

regulation 2(1), that are subject to the requirement

referred to in regulation 45(L) shall report to the

Authority and the Resolution Committee on the

following

(a) the amounts of own funds that, where

applicable, meet the conditions of paragraph (b) of

regulation 45F(2), and the amounts of eligible

liabilities, and the expression of those amounts in

accordance with regulation 45(2) after any

applicable deductions in accordance with Articles

72e to 72j of the CRR;

(b) the amounts of other bail-inable

liabilities; and

(c) for the items referred to in paragraphs

(a) and (b) above

(i) their composition, including their

maturity profile;

(ii) their

ranking

in

normal

insolvency proceedings in terms of article

29A of the Banking Act; and

(iii) whether they are governed by the

laws of a third country and, if so, which third

country, and whether they contain the

contractual terms referred to in regulation

55(1), points (p) and (q) of Article 52(1) and

points (n) and (o) of Article 63 of the CRR

Provided that, the obligation to report on the

amounts of other bail-inable liabilities referred to in

paragraph (b) shall not apply to entities that, at the date

of the reporting of that information, hold amounts of

own funds and eligible liabilities of at least 150 per cent

of the requirement referred to in regulation 45(1) as

calculated in accordance with paragraph (a).

(2) The institutions and entities referred to in

sub-regulation (1) shall report

(a) the information referred to in paragraph

(a) of sub-regulation (1), on at least a biannual

basis; and

(b) the information referred to in

paragraphs (b) and (c) of sub-regulation (1) on at

least an annual basis

Provided that, notwithstanding the

provisions of this sub-regulation, at the request of

the Authority or the Resolution Committee, the

institutions or entities referred to in sub-regulation

(1) shall report the information referred to in sub-

regulation (1) on a more frequent basis.

 (3) Institutions or entities referred to in sub-

regulation (1) shall, on at least an annual basis, make the

following information publicly available

(a) the amounts of own funds that, where

applicable, meet the conditions of paragraph (b) of

regulation 45F(2) and eligible liabilities;

(b) the composition of the items referred to

in paragraph (a), including their maturity profile

and ranking in normal insolvency proceedings in

terms of article 29A of the Banking Act; and

(c) the applicable requirement referred to

in regulations 45E or 45F expressed in accordance

with regulation 45(2).

(*) This sub-regulation shall enter into force on 1 January 2024.

(4) Sub-regulations (1) and (3) shall not apply to

institutions or entities whose resolution plan provides

that the institution or entity is to be wound up under

normal insolvency proceedings.

(5) Where resolution actions have been

implemented or the write-down or conversion power

referred to in regulation 59 has been exercised, public

disclosure requirements referred to in sub-regulation (3)

shall apply from the date of the deadline to comply with

the requirements of regulations 45E or 45F referred to in

regulation 45M.".

28. Immediately after regulation 45I of the principal Adds new

regulations there shall be added the following new regulation

The Resolution Committee shall inform the

"Reporting to the

EBA of the minimum requirement for own funds and

eligible liabilities that has been set, in accordance with

regulations 45E or 45F, for each institution and entity

licensed under the Banking Act and Investment Services

Act."

29. Immediately after regulation 45J of the principal Adds new

regulations there shall be added the following new regulation

(1) The Authority and the Resolution

Committee, as the case may be, shall address any breach

of the minimum requirement for own funds and eligible

eligible liabilities.

liabilities referred to in regulations 45E or 45F on the

basis of at least one of the following

(a) powers referred to in regulation 16A;

(b) powers to address or remove

impediments to resolvability in accordance with

regulations 17 and 18;

(c) early intervention measures in

accordance with regulation 27;

(d) administrative penalties and other

administrative measures in accordance with

regulations 110 and 111;

(e) measures referred to in Article 104 of

the CRD

Provided that, the Authority and the

Resolution Committee, as the case may be, may also

carry out an assessment of whether the institution or

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

definition "entity" in regulation 2(1) is failing or is

likely to fail, in accordance with regulations 32, 32A or

33, as applicable.

(2) The Authority and the Resolution

Committee shall consult each other when they exercise

their respective powers referred to in sub-regulation

(1).";

30. Immediately after regulation 45K of the principal

regulations there shall be added the following new regulation

(1) By way of derogation from regulation

45(1), the Resolution Committee shall determine

appropriate transitional periods for institutions or

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

definition "entity" in regulation 2(1), to comply with the

requirements in regulations 45E or 45F or with

requirements that result from the application of

regulation 45B(4), (5) or (7), as appropriate. Institutions

and entities are obliged to comply with the requirements

in regulations 45E or 45F, or the requirements that

result from the application of regulation 45B(4), (5) or

(7) by not later than 1 st January, 2024

Provided that, the Resolution Committee

shall determine intermediate target levels for the

requirements set out in regulations 45E or 45F, or for

requirements that result from the application of

regulation 45B(4), (5) or (7), as appropriate, that

institutions or entities referred to in paragraphs (b), (c)

or (d) of the definition "entity" in regulation 2(1) shall

be required to comply with as at 1 January 2022. The

intermediate target levels, as a rule, shall ensure a linear

build-up of own funds and eligible liabilities towards

the requirement

Provided further that, the Resolution

Committee may set a transitional period that ends after

1 st January 2024 where duly justified and appropriate,

on the basis of the criteria referred to in sub-regulation

(7), taking into account

(a) the development of the entity’s

financial situation;

(b) the prospect that the entity will be able

to ensure compliance in a reasonable timeframe

with the requirements in regulation 45E or 45F, or

with a requirement that results from the

application of regulation 45B(4), (5) or (7); and

(c) whether the entity is able to replace

liabilities that no longer meet the eligibility or

maturity criteria laid down in Articles 72b and 72c

of the CRR, and regulation 45B or 45F(2), and if

not, whether that inability is of an idiosyncratic

nature or is due to market-wide disturbance.

(2) The deadline for resolution entities to

comply with the minimum level of the requirements

referred to in regulation 45C(5) or (6) shall be 1 st

January 2022.

(3) The minimum levels of the requirements

referred to in regulation 45C(5) and (6) shall not apply

within the two-year period following the date

(a) on which the Resolution Committee

has applied the bail-in tool; or

(b) on which the resolution entity has put

in place an alternative private sector measure as

referred to in paragraph (b) of regulation 32(1) by

which capital instruments and other liabilities

have been written down or converted into

Common Equity Tier 1 instruments, or on which

write down or conversion powers in accordance

with regulation 59, have been exercised in respect

of that resolution entity, in order to recapitalise the

resolution entity without the application of

resolution tools.

(4) The requirements referred to in regulation

45B(4) and (7) as well as regulation 45C(5) and (6), as

applicable, shall not apply within the three-year period

following the date on which the resolution entity or the

group of which the resolution entity is part has been

identified as a G-SII, or the resolution entity starts to be

in the situation referred to in regulation 45C(5) or (6).

(5) By way of derogation from regulation 45(1),

the Resolution Committee shall determine an

appropriate transitional period within which to comply

with the requirements of regulation 45E or 45F, or a

requirement resulting from the application of regulation

45B(4), (5) or (7), as appropriate, for institutions or

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

definition "entity" in regulation 2(1), to which

resolution tools or the write-down or conversion power

referred to in regulation 59 have been applied.

(6) For the purposes of sub-regulations (1) to

(5), the Resolution Committee shall communicate to the

institution or entity referred to in paragraphs (b), (c) or

(d) of the definition "entity" in regulation 2(1) a planned

minimum requirement for own funds and eligible

liabilities for each twelve month period during the

transitional period, with a view to facilitating a gradual

build-up of its loss-absorbing and recapitalisation

capacity

Provided that, at the end of the transitional

period, the minimum requirement for own funds and

eligible liabilities shall be equal to the amount

determined under regulation 45B(4), (5) or (7),

regulation 45C(5) or (6), regulation 45E or regulation

45F, as applicable.

(7) When determining the transitional periods,

the Resolution Committee shall take into account

(a) the prevalence of deposits and the

absence of debt instruments in the funding model;

(b) the access to the capital markets for

eligible liabilities;

(c) the extent to which the resolution

entity relies on Common Equity Tier 1 capital to

meet the requirement referred to in regulation

45E. (8) Subject to sub-regulation (1), the Resolution

Committee shall not be prevented from subsequently

revising either the transitional period or any planned

minimum requirement for own funds and eligible

liabilities communicated under sub-regulation (6).".

31. In regulation 46 of the principal regulations the words

"eligible liabilities", wherever they occur, shall be substituted by the

words "bail-inable liabilities";

32. In paragraph (b)(ii) of sub-regulation (1) of regulation 47 of Amends

the principal regulations the words "eligible liabilities" shall be regulation

of the principal

substituted by the words "bail-inable liabilities".

regulations.

33. Regulation 48 of the principal regulations shall be amended Amends

regulation 48

as follows

of the principal

regulations.

(a) paragraph (e) of sub-regulation (1) thereof, shall be

substituted by the following

"(e) if, and only if, the total reduction of shares or

other instruments of ownership, relevant capital

instruments and bail-inable 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 bail-inable liabilities, including debt instruments

referred to in article 29A(3A) of the Banking Act, in Cap. 371.

accordance with the hierarchy of claims in normal

insolvency proceedings, including the ranking of deposits

provided for in article 29A of the Banking Act, pursuant to

regulation 44, in conjunction with the write down pursuant

to paragraphs (a) to (d) to produce the sum of the amounts

referred to in regulation 47(3) (b) and (c).";

(b) in sub-regulation (2) thereof, the words "eligible

liabilities", wherever they occur, shall be substituted by the

words "bail-inable liabilities";

(c) immediately after sub-regulation (5) thereof, there

shall be added the following new sub-regulation

"(6) In relation to institutions or entities referred to

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

regulation 2(1), all claims resulting from own funds items

have, in terms of Maltese insolvency law, a lower priority

ranking than any claim that does not result from an own

funds item

Provided that, to the extent that an instrument is

only partly recognised as an own funds item, the whole

instrument shall be treated as a claim resulting from an own

funds item and shall rank lower than any claim that does

not result from an own funds item.".

34. Regulation 55 of the principal regulations shall be

substituted by the following

"55. (1) Institutions and entities referred to in

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

2(1) shall include a contractual term by which the creditor or

party to the agreement creating the liability recognises that such

liability may be subject to 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 complies with all of the

following conditions

(a)

the liability is not excluded under regulation

44(2);

(b) the liability is not a deposit referred to in article

29A(3) of the Banking Act;

(c) the liability is governed by the law of a third

country; and

(d) the liability is issued or entered into after the

date on which these regulations shall come into force

Provided that, the Resolution Committee may

decide that the obligation in this regulation shall not apply

to institutions or entities in respect of which the

requirement under regulation 45(1) equals the loss

absorption amount as defined under paragraph (a) of

regulation 45C(2). However liabilities that meet the

conditions referred to in this sub-regulation and which do

not include the contractual term referred to in this sub-

regulation are not counted towards that requirement

Provided further 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 pursuant to the law of the third

country or to a binding agreement concluded with that third

country.

(2) (a) The Resolution Committee shall ensure that where an

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

definition "entity" in regulation 2(1) reaches the determination that is

legally or otherwise impracticable to include in the contractual

provisions governing a relevant liability a term required in accordance

with sub-regulation (1), the institution or entity mentioned above

notifies its determination, including the designation of the class of the

liability and the justification of that determination, to the Resolution

Committee

Provided that, the institution or entity mentioned above

shall submit to the Resolution Committee all information that the said

Resolution Committee requests, within a reasonable time frame

following the receipt of the notification, in order for the Resolution

Committee to assess the effect of such notification on the resolvability

of that institution or entity

Provided further that, in the case of a notification under

paragraph (a) of sub-regulation (2), the obligation to include a term

required in accordance with sub-regulation (1) in the contractual

provisions is automatically suspended from the moment of receipt by

the Resolution Committee of the notification.

(b) Where the Resolution Committee concludes that it is

not legally or otherwise impracticable to include in the contractual

provisions a term required in accordance with sub-regulation (1),

taking into account the need to ensure the resolvability of the

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

definition "entity" in regulation 2(1), the Resolution Committee shall

require, within a reasonable timeframe, the inclusion of such

contractual term, following the notification pursuant to paragraph (a),

the inclusion of such contractual term

Provided that, the Resolution Committee may, in addition,

require the said institution or entity to amend its practices concerning

the application of the exemption from the contractual recognition of

bail-in.

(c) The liabilities referred to in paragraph (a) of sub-

regulation (2), shall not include Additional Tier 1 instruments, Tier 2

instruments and debt instruments referred to under paragraph (a) of Cap. 371.

article 29A(5) of the Banking Act, where those instruments are

unsecured liabilities

Provided that, the liabilities referred to in sub-regulation

(2)(a) shall be senior to the liabilities referred to in article 29A(3A) Cap. 371.

and (4) of the Banking Act.

(d) Where the Resolution Committee, in the context of

the assessment of the resolvability of an institution or entity

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

in regulation 2(1), in accordance with regulations 15 and 16, or

at any other time, determines that, within a class of liabilities

which includes eligible liabilities, the amount of liabilities that,

in accordance with sub-regulation (2)(a), do not include the

contractual term referred to in sub-regulation (1), together with

the liabilities which are excluded from the application of the

bail-in tool in accordance with regulation 44(2), or which are

likely to be excluded in accordance with provided in regulation

73, when applying write-down and conversion powers to eligible

liabilities.

(e) Where the Resolution Committee concludes, on the

basis of the assessment referred to in paragraph (d), that the

liabilities which, in accordance with sub-regulation 2(a), do not

include the contractual term referred to in sub-regulation (1),

create a substantive impediment to resolvability, it shall apply

the powers provided in regulation 17, as appropriate, to remove

that impediment to resolvability.

(f) Liabilities resulting from the institution or entity

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

in regulation 2(1), fail to include in the contractual provisions the

term required by sub-regulation (1), or for which, in accordance

with this sub-regulation, that requirement does not apply, shall

not be counted towards the minimum requirement for own funds

and eligible liabilities.

(3) The Resolution Committee may require institutions or

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

"entity" in regulation 2(1), to provide authorities with a legal opinion

relating to the legal enforceability and effectiveness of the contractual

term referred to in sub-regulation (1).

(4) Where an institution or entity referred to in paragraphs (b),

(c) or (d) of the definition "entity" in regulation 2(1), does not include

in the contractual provisions governing a relevant liability a

contractual term required in accordance with sub-regulation (1), that

shall not prevent the Resolution Committee from exercising the write-

down and conversion powers in relation to that liability.

(5) The Resolution Committee shall specify, where it deems

necessary, the categories of liabilities for which an institution or entity

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

regulation 2(1), may reach the determination that it is legally or

otherwise impracticable to include the contractual term referred to in

sub-regulation (1), based on the conditions further specified by the

EBA as a result of the application of article 55(6) of the BRRD.".

35. Regulation 59 of the principal regulations shall be amended Amends

regulation 59 of

as follows

the principal

regulations.

(a) in the marginal note thereof, the words "Requirement

to write down or convert capital instruments" shall be substituted

by the words "Requirement to write-down or convert relevant

capital instruments and eligible liabilities.";

(b) sub-regulation (1) thereof, shall be substituted by the

following

"(1) The power to write-down or convert relevant

capital instruments and eligible liabilities 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, 32A or 33 are met

Provided that, where relevant capital

instruments and eligible liabilities have been purchased by

the resolution entity indirectly through other entities in the

same resolution group, the power to write-down or convert

those relevant capital instruments and eligible liabilities

shall be exercised together with the exercise of the same

power at the level of the parent undertaking of the entity

concerned or at the level of other parent undertakings that

are not resolution entities, so that the losses are effectively

passed on to, and the entity concerned is recapitalised by,

the resolution entity

Provided further that, after the exercise of the

power to write-down or convert relevant capital

instruments and eligible liabilities independently of

resolution action, the valuation provided in regulation 74

shall be carried out, and regulation 75 shall apply.";

(c) immediately after sub-regulation (1) thereof, there

shall be added the following new sub-regulations

"(1A)

The power to write-down or convert

eligible liabilities independently of resolution action may

be exercised only in relation to eligible liabilities that meet

the conditions referred to in regulation 45F(2) , except the

condition related to the maturity of liabilities as set out in

Article 72c(1) of the CRR

Provided that, the Resolution Committee shall

when the power mentioned above is exercised, ensure that

the write-down or conversion is done in accordance with

the principle referred to in paragraph (g) of regulation

34(1);

(1b) Where a resolution action in relation to a

resolution entity or, in exceptional circumstances in

deviation from the resolution plan, in relation to an entity

that is not a resolution entity, the amount that is reduced,

written or converted in accordance with regulation 60(1) at

the level of such entity, shall count towards the thresholds

laid down in regulation 37(10) and paragraph (a) of

regulation 44(5), or paragraph (a) of regulation 44(8) that

apply to the entity concerned.";

(d) in sub-regulation (2) thereof, the words" capital

instruments," shall be substituted by the words" capital

instruments, and eligible liabilities as referred to in sub-

regulation (1A)";

(e)

sub-regulation (3) thereof, shall be amended as

(i) The introductory paragraph of sub-regulation

(3) thereof, shall be substituted by the following

"(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, and eligible liabilities as

referred to in sub-regulation (1a), issued by an

institution or 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:";

(ii) paragraphs (a) and (b) of sub-regulation (3)

thereof shall be substituted by the following

"(a) Where the determination has been made

that the conditions for resolution specified in

regulations 32, 32A or 33 have been met, before any

resolution action is taken; or

(b) The appropriate authority determines that

unless that power is exercised in relation to the

relevant capital instruments and eligible liabilities as

referred to in sub-regulation (1A), the institution or

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

definition "entity" in regulation 2(1) will no longer be

viable;";

(f) in sub-regulations (4) and (10) thereof, the words

"capital instruments", wherever they occur, shall be substituted

by the words "capital instruments, or eligible liabilities as

referred to in sub-regulation (1A).".

36. Regulation 60 of the principal regulations shall be amended Amends

regulation 60 of

the principal

regulations.

(a) in the marginal note thereof, the words "Provisions

governing the write-down or conversion of capital instruments"

shall be substituted by the words "Provisions governing the

write-down or conversion of relevant capital instruments and

eligible liabilities.";

(b) immediately after paragraph (c) of sub-regulation (1)

thereof, there shall be added the following new paragraph

"(d) The principal amount of eligible liabilities

referred to in regulation 59(1A) is written down and

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 eligible liabilities, whichever is lower.";

(c) sub-regulation (2) thereof, shall be substituted by the

following

"(2) Where the principal amount of a relevant

capital instrument, or an eligible liability as referred to in

regulation 59(1A) 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, or of the eligible liability as

referred to in regulation 59(1A) 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, or of the liabilities as

referred to in regulation 59(1A), other than in

accordance with sub-regulation (3).";

(d)

sub-regulation (3) thereof, shall be amended as

(i)

the introductory paragraph of sub-regulation

(3) thereof, shall be substituted by the following

"(3) In order to effect a conversion of relevant

capital instruments, and eligible liabilities as referred

to in regulation 59(1A), under paragraphs (b), (c) and

(d) of sub-regulation (1), 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 and such eligible liabilities

Provided that relevant capital instruments

and such liabilities may only be converted where the

following conditions are met:"

(ii) in paragraph (d) thereof, the words "each

relevant capital instrument" shall be substituted by the

words "each relevant capital instrument, or each eligible

liability as referred to in regulation 59(1A)".

37. Immediately after sub-regulation (1) of regulation 61 of the

principal regulations there shall be added the following new sub-

regulation (1A)

"(1A)Where the relevant capital instruments, or eligible

liabilities as referred to in regulation 59(1a), are recognised for the

purposes of meeting the requirement referred to in regulation 45F(1),

the appropriate authority responsible for making the determination

referred to in regulation 59(3), shall be the appropriate authority of the

Member State 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 accordance with Title III of the CRD.".

38. Regulation 62 of the principal regulations shall be amended Amends

regulation 62

as follows

of the principal

regulations .

(a) sub-regulation (1) thereof, shall be substituted by the

following

"(1) Before making a determination referred to in

paragraph (b), (c), (d) or (e) of regulation 59(3) in relation

to a subsidiary that issues relevant capital instruments, or

eligible liabilities as referred to in regulation 59(1a), for the

purposes of meeting the requirement referred to in

regulation 45F on an individual basis, or relevant capital

instruments that are recognised for the purposes of meeting

the own funds requirements on an individual or

consolidated basis, an appropriate authority complies with

the following requirements

(a) when considering whether to make a

determination referred to in paragraphs (b), (c), (d) or

(e) of regulation 59(3) after consulting the Resolution

Committee, or a European regulatory authority acting

as the resolution authority of the relevant resolution

entity, it notifies, within twenty-four hours of

consulting that authority

(i) 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, if

different, the appropriate authority in the

Member State where the consolidating

supervisor is located;

(ii) the Resolution Committee or

European Resolution authorities of other

entities within the same resolution group,

whichever is the case, that directly or indirectly

purchased liabilities referred to in regulation

45F(2) from the entity that is subject to

regulation 45F(1); and

(b) when considering whether to make a

determination referred to in paragraph (c) of

regulation 59(3), it notifies, without delay

(i)

where the Authority 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 powers are 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 has

issued the relevant capital instruments in

relation to which the write down or conversion

powers are 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.

(c) in sub-regulation (4) thereof, the words

"after consulting the authorities notified, shall assess

the following matters:" shall be substituted by the

words, "after consulting the authorities notified in

accordance with paragraph (a)(i) or (b) of sub-

regulation (1), shall assess the following matters:".

39. In paragraphs (e), (f) and (j) of sub-regulation (1) of

regulation 63 of the principal regulations the words "eligible

liabilities", wherever they occur, shall be substituted by the words

"bail-inable liabilities";

40. In sub-regulation (4) of regulation 66 of the principal

regulations the words "eligible liabilities" shall be substituted by the

words "bail-inable liabilities.".

41. Regulation 68 of the principal regulations shall be amended Amends

regulation 68 of

as follows

the principal

regulations.

(a) the introductory paragraph of sub-regulation (3)

thereof, shall be substituted by the following

"(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, a suspension of obligation under

regulation 33B 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:";

(b) sub-regulation (5) thereof, shall be substituted by the

following

"(5) A suspension or restriction under regulations

33B, 69, or 70 shall not constitute non-performance of a

contractual obligation for the purposes of sub-regulations

(1) and (3) and of regulation 71(1).".

42. Regulation 69 of the principal regulations shall be amended Amends

regulation 69 of

as follows

the principal

regulations.

(a) sub-regulation (4) thereof, shall be substituted by the

following

"(4) Any suspension under sub-regulation (1), shall

not apply to payment and delivery obligations owed to the

following

(a) systems and operators of systems

designated in accordance with Directive 98/26/EC;

(b) central counterparties authorised in the

European Union pursuant to Article 14 of Regulation

(EU) No 648/2012 and third-country central

counterparties recognised by ESMA pursuant to

Article 25 of the said Regulation;

(c)

central banks.";

(b) immediately after sub-regulation (5) thereof, there

shall be added the following new proviso

"Provided that, the Resolution Committee shall

set the scope of that power having regard to the

circumstances of each case and shall carefully assess the

appropriateness of extending the suspension to eligible

deposits, especially to covered deposits held by natural

persons and micro, small and medium-sized enterprises

Provided further that, where the power to

suspend payment or delivery obligations is exercised in

respect of eligible deposits, the Resolution Committee shall

ensure that depositors have access to an appropriate daily

amount from those deposits.".

43. Sub-regulation (2) of regulation 70 of the principal

regulations shall be substituted by the following

"(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

authorised in the Union pursuant to Article 14 of Regulation

(EU) No 648/2012 and third-country central counterparties

recognised by ESMA pursuant to Article 25 of Regulation (EU)

No 648/2012, and central banks, over assets pledged or provided

for by way of margin or collateral by the institution under

resolution.".

44. Sub-regulation (3) of regulation 71 of the principal

regulations shall be substituted by the following

"(3) Any suspension under sub-regulation (1) or (2) shall

not apply to systems or operators designated for the purposes of

Directive 98/26/EC, central counterparties authorised in the

Union pursuant to Article 14 of Regulation (EU) No 648/2012

and third-country central counterparties recognised by ESMA

pursuant to Article 25 of Regulation (EU) No 648/2012, or

central banks.".

45. Immediately after regulation 71 of the principal regulations

there shall be added the following new regulation

(1) The institutions and entities referred to

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

regulation 2(1) shall include, in any financial contract

which they enter into and which is governed by third-

country law, terms which the parties recognise that the

financial contract may be subject to the exercise of

powers by the Resolution Committee to suspend or

restrict rights and obligations under regulations 33A,

69, 70 and 71, and recognise that they are bound by the

requirements of regulation 68.

(2) The Resolution Committee shall also require

that Union parent undertakings ensure that their third-

country subsidiaries include, in the financial contracts

referred to in sub-regulation (1), terms to exclude that

the exercise of the power of the Resolution Committee

to suspend or restrict rights and obligations of the

Union parent undertaking, in accordance with sub-

regulation (1), constitutes a valid ground for early

termination, suspension, modification, netting, exercise

of set-off rights or enforcement of security interests on

those contracts

Provided that, the requirement in sub-

regulation (1) may apply in respect of third-country

subsidiaries which are

(a) credit institutions;

(b) investment firms (or which would be

investment firms if they had a head office in the

relevant Member State); or

(c) financial institutions.

(3) Sub-regulation (1) shall apply to any

financial contract which

(a) creates a new obligation, or materially

amends an existing obligation after the entry into

force of the provisions of this regulation;

(b) provides for the exercise of one or

more termination rights or rights to enforce

security interests to which regulation 33B, 68, 69,

70 or 71 would apply if the financial contract

were governed by the laws of a Member State.

(4) Where an institution or entity referred to in

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

regulation 2(1), does not include the contractual term

required in accordance with sub-regulation (1), that

shall not prevent the Resolution Committee from

applying the powers referred to in regulations 33A, 68,

69, 70 or 71 in relation to that financial contract.";

46. Sub-regulation (1) of regulation 88 of the principal

regulations, shall be amended as follows

(a)

the words "Where the Resolution Committee is",

shall be substituted by the words "Subject to regulation 89,

where the Resolution Committee is" and the words " regulations

12, 13, 16, 18, 45, 91 and 92, and" shall be substituted by the

words "regulations 12, 13, 16, 45, 45A to 45H, 91 and 92, and";

and

(b) in sub-paragraph (i) thereof, the words "regulation

45" shall be substituted by the words "regulations 45, 45A to

45H.";

47. Regulation 89 shall be substituted by the following

"89. (1) Where a third-country institution or third-

country parent undertaking has subsidiaries established in the

Union or Union parent undertakings 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 where those entities are established or where

those significant branches are located shall establish one single

European resolution college.

(2) The European resolution college referred to in sub-

regulation (1) shall perform the functions and carry out the tasks

specified in regulation 88 with respect to the entities referred to

in sub-regulation (1) and, in so far as those tasks are relevant, to

their branches

Provided that, the tasks referred to in this sub-

regulation shall include the setting of the requirement referred to

in regulations 45 and 45A to 45H in relation to which the

members of the European resolution college shall take into

consideration the global resolution strategy, if any, adopted by

third-country authorities when setting the said requirement

Provided further that, where in accordance with the

global resolution strategy, subsidiaries established in the Union

or a Union parent undertaking and its subsidiary institutions are

not resolution entities and the members of the European

resolution college agree with that strategy, subsidiaries

established in the Union or, on a consolidated basis, the Union

parent undertaking shall comply with the requirement of

regulation 45F(1) by issuing instruments referred to in

paragraphs (a) and (b) of regulation 45F(2) to their ultimate

parent undertaking established in a third country, or to the

subsidiaries of that ultimate parent undertaking that are

established in the same third country or to other entities under

the conditions set out in paragraphs (a)(i) and (b)(ii) of

regulation 45F(2).

(3) Where only one Union parent undertaking holds all Union

subsidiaries of a third-country institution or third-country parent

undertaking, the European resolution college shall be chaired by the

resolution authority of the Member State where the Union parent

undertaking is established

Provided that, where sub-regulation (5) does not apply, the

resolution authority of a Union parent undertaking or a Union

subsidiary with the highest value of total on-balance sheet assets held

shall chair the European resolution college.

(4) Malta together with other relevant Member States may, by

mutual agreement of all of the relevant parties, waive the requirement

to establish a European resolution college if another group or college

performs the same functions and carries out the same tasks specified in

this regulation and complies with all of the conditions and procedures,

including those covering membership and participation in European

resolution colleges, established in Articles 89 and 90 of the BRRD

Provided that, 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 Article

88 of the BRRD.".

48. The Schedule annexed to the principal regulations shall be Amends the

Schedule

amended as follows

annexed to the

principal

(a) in paragraph (6) of Section B thereof, the words regulations.

"eligible liabilities:" shall be substituted by the words "bail-

inable liabilities:";

(b) in paragraph (17) of Section C thereof, the words

"eligible liabilities" shall be substituted by the words "bail-inable

liabilities".

€3.60