RECOVERY AND RESOLUTION REGULATIONS

SUBSIDIARY LEGISLATION 330.09

RECOVERY AND RESOLUTION REGULATIONS

18th September, 2015

LEGAL NOTICE 301 of 2015, and 89 of 2017 as amended by Legal

Notices 279 of 2019, 6 of 2021, 74 of 2022, 300 of 2023 and 129 and 302 of

2024 and 102 and 171 of 2025.

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

Resolution Regulations.

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

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

May 2014 establishing a framework for the recovery and resolution

of credit institutions and investment firms and amending Council

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

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

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

648/2012, of the European Parliament and of the Council.

(3) These regulations lay down rules and procedures relating to

the recovery and resolution of entities

Provided that when establishing and applying the

requirements of these regulations, and when using the different

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

provisions, the Resolution Committee and the Authority shall take

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

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

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

and the complexity of its activities, its membership of an

institutional protection scheme (IPS) that meets the requirements of

Article 113(7) of the CRR or other cooperative mutual solidarity

systems as referred to in Article 113(6) of that Regulation and

whether it exercises any investment services or activities as defined

in paragraph (2) of Article 4(1) of Directive 2014/65/EU.

(4) These regulations shall not apply to entities that are also

authorised in accordance with Article 14 of Regulation (EU) No 648/

2012.

Amended by

L.N. 6 of 2021.

SECTION A

Information to be included in recovery plans

The recovery plan shall include the following information

(1) a summary of the key elements of the plan and a summary of overall

recovery capacity;

(2) a summary of the material changes to the institution since the most recently

filed recovery plan;

(3) a communication and disclosure plan outlining how the institution intends to

manage any potentially negative market reactions;

(4) a range of capital and liquidity actions required to maintain or restore the

viability and financial position of the institution;

(5)

an estimation of the time-frame for executing each material aspect of the

plan;

(6) a detailed description of any material impediment to the effective and timely

execution of the plan, including consideration of impact on the rest of the group,

customers and counterparties;

(7)

identification of critical functions;

(8) a detailed description of the processes for determining the value and

marketability of the core business lines, operations and assets of the institution;

(9) a detailed description of how recovery planning is integrated into the

corporate governance structure of the institution as well as the policies and

procedures governing the approval of the recovery plan and identification of the

persons in the organisation responsible for preparing and implementing the plan;

(10) arrangements and measures to conserve or restore the institution’s own

funds;

(11) arrangements and measures to ensure that the institution has adequate access

to contingency funding sources, including potential liquidity sources, an assessment

of available collateral and an assessment of the possibility to transfer liquidity across

group entities and business lines, to ensure that it can continue to carry out its

operations and meet its obligations as they fall due;

(12) arrangements and measures to reduce risk and leverage;

(13) arrangements and measures to restructure liabilities;

(14) arrangements and measures to restructure business lines;

(15) arrangements and measures necessary to maintain continuous access to

financial markets infrastructures;

(16) arrangements and measures necessary to maintain the continuous

functioning of the institution’s operational processes, including infrastructure and IT

services;

(17) preparatory arrangements to facilitate the sale of assets or business lines in a

time-frame appropriate for the restoration of financial soundness;

RECOVERY AND RESOLUTION

(18) other management actions or strategies to restore financial soundness and

the anticipated financial effect of those actions or strategies;

(19) preparatory measures that the institution has taken or plans to take in order

to facilitate the implementation of the recovery plan, including those necessary to

enable the timely recapitalisation of the institution;

(20) a framework of indicators which identifies the points at which appropriate

actions referred to in the plan may be taken.

SECTION B

Information that the Resolution Committee may request institutions to provide for

the purposes of drawing up and maintaining resolution plans

The Resolution Committee may request institutions to provide for the purposes of

drawing up and maintaining resolution plans at least the following information

(1) a detailed description of the institution’s organisational structure including a

list of all legal persons;

(2) identification of the direct holders and the percentage of voting and non-

voting rights of each legal person;

(3) the location, jurisdiction of incorporation, licensing and key management

associated with each legal person;

(4) a mapping of the institution’s critical operations and core business lines

including material asset holdings and liabilities relating to such operations and

business lines, by reference to legal persons;

(5) a detailed description of the components of the institution’s and all its legal

entities’ liabilities, separating, at a minimum by types and amounts of short term and

long-term debt, secured, unsecured and subordinated liabilities;

(6)

details of those liabilities of the institution that are bail-inable liabilities;

(7) an identification of the processes needed to determine to whom the

institution has pledged collateral, the person that holds the collateral and the

jurisdiction in which the collateral is located;

(8) a description of the off balance sheet exposures of the institution and its

legal entities, including a mapping to its critical operations and core business lines;

(9)

the material hedges of the institution including a mapping to legal persons;

(10) identification of the major or most critical counterparties of the institution as

well as an analysis of the impact of the failure of major counterparties in the

institution’s financial situation;

(11) each system on which the institution conducts a material number or value

amount of trades, including a mapping to the institution’s legal persons, critical

operations and core business lines;

(12) each payment, clearing or settlement system of which the institution is

directly or indirectly a member, including a mapping to the institution’s legal

persons, critical operations and core business lines;

(13) a detailed inventory and description of the key management information

systems, including those for risk management, accounting and financial and

regulatory reporting used by the institution including a mapping to the institution’s

legal persons, critical operations and core business lines;

(14) an identification of the owners of the systems identified in point (13),

service level agreements related thereto, and any software and systems or licences,

RECOVERY AND RESOLUTION

including a mapping to their legal entities, critical operations and core business

lines;

(15) an identification and mapping of the legal persons and the interconnections

and interdependencies among the different legal persons such as

(i)

common or shared personnel, facilities and systems;

(ii) capital, funding or liquidity arrangements;

(iii) existing or contingent credit exposures;

(iv) cross guarantee agreements, cross-collateral arrangements, cross-

default provisions and cross-affiliate netting arrangements;

(v) risks transfers and back-to-back trading arrangements; service level

agreements;

(16) the European regulatory authority and the European resolution authority for

each legal person;

(17) the director responsible for providing the information necessary to prepare

the resolution plan of the institution as well as those responsible, if different, for the

different legal persons, critical operations and core business lines;

(18) a description of the arrangements that the institution has in place to ensure

that, in the event of resolution, the Resolution Committee will have all the necessary

information, as determined by the Resolution Committee, for applying the resolution

tools and powers;

(19) all the agreements entered into by the institutions and their legal entities

with third parties the termination of which may be triggered by a decision of the

authorities to apply a resolution tool and whether the consequences of termination

may affect the application of the resolution tool;

(20) a description of possible liquidity sources for supporting resolution;

(21) information on asset encumbrance, liquid assets, off-balance sheet activities,

hedging strategies and booking practices.

SECTION C

Matters that the Resolution Committee is to consider when assessing the

resolvability of an institution or group

When assessing the resolvability of an institution or group, the Resolution

Committee shall consider the following

When assessing the resolvability of a group, references to an institution shall be

deemed to include any institution or entity referred to in paragraphs (c) or (d) of the

definition "entity" in regulation 2(1) within a group

(1) the extent to which the institution is able to map core business lines and

critical operations to legal persons;

(2) the extent to which legal and corporate structures are aligned with core

business lines and critical operations;

(3) the extent to which there are arrangements in place to provide for essential

staff, infrastructure, funding, liquidity and capital to support and maintain the core

business lines and the critical operations;

(4) the extent to which the service agreements that the institution maintains are

fully enforceable in the event of resolution of the institution;

(5)

the extent to which the governance structure of the institution is adequate for

RECOVERY AND RESOLUTION

managing and ensuring compliance with the institution’s internal policies with

respect to its service level agreements;

(6) the extent to which the institution has a process for transitioning the services

provided under service level agreements to third parties in the event of the

separation of critical functions or of core business lines;

(7) the extent to which there are contingency plans and measures in place to

ensure continuity in access to payment and settlement systems;

(8) the adequacy of the management information systems in ensuring that the

Resolution Committee and the European resolution authorities are able to gather

accurate and complete information regarding the core business lines and critical

operations so as to facilitate rapid decision making;

(9) the capacity of the management information systems to provide the

information essential for the effective resolution of the institution at all times even

under rapidly changing conditions;

(10) the extent to which the institution has tested its management information

systems under stress scenarios as defined by the Resolution Committee;

(11) the extent to which the institution can ensure the continuity of its

management information systems both for the affected institution and the new

institution in the case that the critical operations and core business lines are

separated from the rest of the operations and business lines;

(12) the extent to which the institution has established adequate processes to

ensure that it provides the Resolution Committee and the European resolution

authorities with the information necessary to identify depositors and the amounts

covered by the deposit guarantee schemes;

(13) where the group uses intra-group guarantees, the extent to which those

guarantees are provided at market conditions and the risk management systems

concerning those guarantees are robust;

(14) where the group engages in back-to-back transactions, the extent to which

those transactions are performed at market conditions and the risk management

systems concerning those transactions practices are robust;

(15) the extent to which the use of intra-group guarantees or back-to-back

booking transactions increases contagion across the group;

(16) the extent to which the legal structure of the group inhibits the application of

the resolution tools as a result of the number of legal persons, the complexity of the

group structure or the difficulty in aligning business lines to group entities;

(17) the amount and type of bail-inable liabilities of the institution;

(18) where the assessment involves a mixed activity holding company, the extent

to which the resolution of group entities that are institutions or financial institutions

could have a negative impact on the non-financial part of the group;

(19) the existence and robustness of service level agreements;

(20) whether third-country authorities have the resolution tools necessary to

support resolution actions by European resolution authorities, and the scope for

coordinated action between European Union and third-country authorities;

(21) the feasibility of using resolution tools in such a way which meets the

resolution objectives, given the tools available and the institution’s structure;

(22) the extent to which the group structure allows the Resolution Committee to

RECOVERY AND RESOLUTION

resolve the whole group or one or more of its group entities without causing a

significant direct or indirect adverse effect on the financial system, market

confidence or the economy and with a view to maximising the value of the group as

a whole;

(23) the arrangements and means through which resolution could be facilitated in

the cases of groups that have subsidiaries established in different jurisdictions;

(24) the credibility of using resolution tools in such a way which meets the

resolution objectives, given possible impacts on creditors, counterparties, customers

and employees and possible actions that third-country authorities may take;

(25) the extent to which the impact of the institution’s resolution on the financial

system and on financial market’s confidence can be adequately evaluated;

(26) the extent to which the resolution of the institution could have a significant

direct or indirect adverse effect on the financial system, market confidence or the

economy;

(27) the extent to which contagion to other institutions or to the financial markets

could be contained through the application of the resolution tools and powers;

(28) the extent to which the resolution of the institution could have a significant

effect on the operation of payment and settlement systems.

(1) In these regulations, unless the context otherwise

requires

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

"Additional Tier 1 instruments" means capital instruments that

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

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

liability that is reduced or converted to shares or other instruments

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

power pursuant to the use of the bail-in tool;

"aggregate amount" means the aggregate amount by which the

Resolution Committee has assessed that bail-inable liabilities are to

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

"appropriate authority" means the Authority or the Resolution

Committee, as the case may be;

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

requirements laid down in regulation 42(2);

"asset separation tool" means the mechanism for effecting a

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

an institution under resolution to an asset management vehicle in

accordance with regulation 42;

"the Authority" means the Malta Financial Services Authority

established under the Act;

"automatic acceleration" means a situation in which a covered bond

automatically becomes immediately due and payable upon the

insolvency or resolution of the issuer and in respect of which the

covered bond investors have an enforceable claim for repayment at a

time earlier than the original maturity date;

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

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

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

between one of those group entities and a third party;

"bail-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);

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

the Resolution Committee of the write-down and conversion

powers in relation to liabilities of an institution under resolution in

accordance with regulation 43;

"branch" has the same meaning as that assigned to it in point (17)

of Article 4(1) of the CRR;

" b r i d g e i n st i t u t i o n " m e a n s a l e g a l p e r s o n t h a t m e e t s t h e

requirements laid down in regulation 40(2);

"bridge institution tool" means the mechanism for transferring

shares or other instruments of ownership issued by an institution

under resolution or assets, rights or liabilities of an institution

under resolution to a bridge institution, in accordance with

regulation 40;

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

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

framework for the recovery and resolution of credit institutions and

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

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

2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and

Regulations (EU) No 1093/2010 and (EU) No 648/2012, as

amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory technical

standards, guidelines and similar measures that have been or may

be issued thereunder;

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

public holiday in Malta;

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

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

activity of credit institutions and the prudential supervision of

credit institutions, amending Directive 2002/87/EC and repealing

Directives 2006/48/EC and 2006/49/EC, as amended from time to

time, and includes any implementing measures that have been or

may be issued thereunder

Provided that, for the purposes of prudential supervision

and resolution of investment firms

(i)

references to the CRD throughout these regulations

shall be construed as referring to the IFD; and

(ii) references to specific provisions of the CRD throughout

these regulations shall be construed as referring to the

corresponding provisions of the IFD;

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

the Central Bank of Malta Act;

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

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

"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;

"Common Equity Tier 1 instruments" means capital instruments

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

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

"company" means a limited liability company constituted in

Malta in accordance with the Commercial Partnerships Ordinance *

or the Companies Act, or any law which may from time to time be

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

authorisation in another country outside Malta under the laws of

any country provided that such company, if not constituted in

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

of Malta;

"conditions for resolution" means the conditions referred to in

regulation 32(1);

"consoli dated basis" m eans the basis of the consolidated

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

"consolidating supervisor" means consolidating supervisor as

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

"conversion rate" means the factor that determines the number of

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

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

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

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

a debt claim;

"core business lines" means business lines and associated

services which represent material sources of revenue, profit or

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

institution forms part;

"covered bond" means 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;

"covered deposits" means covered deposits as defined in point

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

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

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

activity of credit institutions and the prudential supervision of

credit institutions, amending Directive 2002/87/EC and repealing

Directives 2006/48/EC and 2006/49/EC, as amended from time to

time, and includes any implementing measures that have been or

may be issued thereunder

Provided that, for the purposes of prudential supervision

and resolution of investment firms

(i)

references to the CRD throughout these regulations

shall be construed as referring to the IFD; and

(ii) references to specific provisions of the CRD throughout

these regulations shall be construed as referring to the

corresponding provisions of the IFD;;

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

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

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

"crisis management measure" means a resolution action or the

appointment of a special manager under regulation 35 or a person

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

"crisis prevention measure" means the exercise of powers to

direct removal of deficiencies or impediments to recoverability

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

impediments to resolvability under regulations 17 or 18, the

application of an early intervention measure under regulation 27,

the appointment of a temporary administrator under regulation 29

or the exercise of the write-down or conversion powers under

regulation 59;

"critical functions" means activities, services or operations the

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

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

economy or to disrupt financial stability due to the size, market

share, external and internal interconnectedness, complexity or

cross-border activities of the institution or group, with particular

regard to the substitutability of those activities, services or

operations;

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

established in more than one Member State;

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

Parliament and of the Council of 26 June 2013 on prudential

requirements for credit institutions and amending Regulation (EU) No

648/2012, as am ended from tim e to tim e, and incl udes any

implementing measures that have been or may be issued thereunder;

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

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

instruments creating or acknowledging a debt, and instruments

giving rights to acquire debt instruments;

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

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

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

the person making the payment and the person receiving it;

"deposit guarantee scheme" means a deposit guarantee scheme

introduced and officially recognised by a Member State pursuant to

Article 4 of Directive 2014/49/EU;

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

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

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

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

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

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

collateral arrangements, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder;

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

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

deposit guarantee schemes, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder;

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

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

markets in financial instruments and amending Directive 2002/92/

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

includes any implementing measures that have been or may be

issued thereunder;

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

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

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

any implementing measures that have been or may be issued

thereunder;

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

Parliament and of the Council of 19 May 1998 on settlement

finality in payment and securities settlement systems, as amended

from time to time, and includes any implementing measures that

have been or may be issued thereunder;

"director" includes an individual occupying the position of

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

empowered to carry out substantially the same functions in relation

to the direction of the company as those carried out by a director

and in respect of a company registered, licensed or holding an

equivalent authorisation outside Malta includes a member of a local

board or agent or representative of that company;

"EBA" means the European Banking Authority established by

Regulation (EU) No 1093/2010;

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

agreement on the European Economic Area signed at Oporto on the

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

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

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

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

"eligible liabilities" means 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;

"emergency liquidity assistance" means the provision by a

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

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

financial institution, or group of solvent financial institutions, that

is facing temporary liquidity problems, without such operation

being part of monetary policy;

"entity" means

(a) institutions that are established in the European Union;

(b) financial institutions that are established in the Union

when the financial institution is a subsidiary of a credit

institution or investment firm, or of a company

referred to in paragraph (c) or (d), and is covered by

the supervision of the parent undertaking on a

consolidated basis in accordance with Articles 6 to 17

of the CRR;

(c) financial holding companies, mixed financial holding

companies and mixed-activity holding companies that

are established in the Union;

(d) parent financial holding companies in a Member State,

Union parent financial holding companies, parent

mixed financial holding companies in a Member State,

Union parent mixed financial holding companies;

(e) branches of institutions that are established outside the

European Union in accordance with the specific

conditions laid down in this regulation;

"ESRB" means the European Systemic Risk Board established by

Regulation (EU) No 1092/2010;

"European Central Bank" means the European Central Bank

established in accordance with Article 13 of t he Treaty on

European Union;

"European regulatory authority" means an authority which is

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

St a t e a n d i s e m p o w e r e d b y l a w o r r e g u l a t i o n t o s u p e r v i s e

investment firms or credit institutions;

"European resolution authority" means an authority which is

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

State and which exercises any function corresponding to the

functions of the Resolution Committee under these regulations;

"extraordinary public financial support" means State Aid within

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

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

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

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

viability, liquidity or solvency of an institution or of an entity or of

a group of which such an institution or entity forms part;

"financial contracts" includes the following contracts and

agreements

(a) securities contracts, including

(i)

contracts for the purchase, sale or loan of a

security, a group or index of securities;

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

securities;

(iii) repurchase or reverse repurchase transactions on

any such security, group or index;

(b) commodities contracts, including

(i)

contracts for the purchase, sale or loan of a

commodity or group or index of commodities

for future delivery;

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

commodities;

(iii) repurchase or reverse repurchase transactions on

any such commodity, group or index;

(c) futures and forwards contracts, including contracts

(other than a commodities contract) for the purchase,

sale or transfer of a commodity or property of any

other description, service, right or interest for a

specified price at a future date;

(d) swap agreements, including

(i)

swaps and options relating to interest rates; spot

or other foreign exchange agreements; currency;

an equity index or equity; a debt index or debt;

commodity indexes or commodities; weather;

emissions or inflation;

(ii) total return, credit spread or credit swaps;

(iii) any agreements or transactions that are similar

to an agreement referred to in paragraph (i) or

(ii) which is the subject of recurrent dealing in

the swaps or derivatives markets;

(e) inter-bank borrowing agreements where the term of the

borrowing is three months or less;

(f)

master agreements for any of the contracts or

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

"financial holding company" means a financial holding company

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

"financial institution" means a financial institution as defined in

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

"financial instrument" shall have the same meaning as that

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

"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;

"group" means a parent undertaking and its subsidiaries;

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

"group financing arrangement" means the financing arrangement

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

authority;

" g r ou p - l e v e l r e s o l ut i o n a u t ho r i t y " m e a n s t he R e s o l u ti o n

Committee when Malta is the consolidating supervisor or the

resolution authority in the Member State in which the consolidating

supervisor is situated;

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

and maintained in accordance with regulation 7;

"group resolution" means either of the following

(a) the taking of resolution action at the level of a parent

undertaking or of an institution subject to consolidated

supervision, or

(b) the coordination of the application of resolution tools

and the exercise of resolution powers by the

Resolution Committee and the European resolution

authorities concerned in relation to group entities that

meet the conditions for resolution;

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

up in accordance with regulations 12 and 13;

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

purposes of group resolution in accordance with regulation 91;

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

for equity;

"the IFD" means Directive (EU) 2019/2034 of the European

Parliament and of the Council of 27 November 2019 on the

prudential supervision of investment firms and amending

Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU,

2014/59/EU and 2014/65/EU, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder;

"the IFR" means Regulation (EU) 2019/2033 of the European

Parliament and of the Council of 27 November 2019 on the

prudenti al requirements of invest ment f irm s and amending

Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/

2014 and (EU) No 806/2014, as amended from time to time, and

includes any implementing measures that have been or may be

issued thereunder; and

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

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

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

market price;

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

"institution under resolution" means an institution, a financial

institution, a financial holding company, a mixed financial holding

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

holding company in a Member State, a Union parent financial

holding company, a parent mixed financial holding company in a

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

in respect of which a resolution action is taken;

"institutional protection scheme" or "IPS" means an arrangement

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

CRR;

"instruments of ownership" means shares, other instruments that

confer ownership, instruments that are convertible into or give the

right to acquire shares or other instruments of ownership, and

instruments representing interests in shares or other instruments of

ownership;

"insurance undertaking" shall have the same meaning as that

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

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

entity guarantees the obligations of another group entity to a third

party;

"investment firm" means an investment firm as defined in point

(22) of article 4(1) of the IFR, which is subject to the initial capital

requirement of €750,000, and excluding firms which are not

authorised to provide any of the investment services or to perform any

of the investment activities listed in points (3) and (6) of Section A of

Annex I to Directive 2014/65/EU;

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

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

the Council;

"liquidation entity" means a legal person established in the Union in

respect of which the group resolution plan or, for entities that are not

part of a group, the resolution plan, provides that the entity is to be

wound up under normal insolvency proceedings, or an entity, within a

resolution group other than a resolution entity, in respect of which the

group resolution plan does not provide for the exercise of write-down

and conversion powers;

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

point (135) of Article 4(1) of the CRR;

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

and includes an EEA State;

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

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

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

Commission Recommendation 2003/361/EC;

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

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

CRR;

"mixed financial holding company" means a mixed financial

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

CRR;

"netting arrangement" means an arrangement under which a

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

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

the occurrence of an enforcement event (however or wherever

defined) the obligations of the parties are accelerated so as to

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

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

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

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

Article 2 of Directive 98/26/EC;

"normal insolvency proceedings" means collective insolvency

proceedings which entail the partial or total divestment of a debtor

and the appointment of a liquidator or an administrator normally

applicable to institutions under Maltese law and either specific to

those institutions or generally applicable to any natural or legal

person;

"overseas appropriate authority" means an authority of a Member

State identified in accordance with Article 61 of the BRRD that is

responsible under the national law of that State for making the

determinations referred to in regulation 59(3);

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

Article 4(1) of the CRR;

"own funds requirements" means the requirements laid down in

regulations 92 to 98 of the CRR;

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

parent financial holding company in a Member State as defined in

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

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

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

CRR;

"parent mixed financial holding company in a Member State"

means a parent mixed financial holding company in a Member

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

"parent undertaking" means a parent undertaking as defined in

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

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

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

combination of those items are transferred from an institution under

resolution;

"recovery capacity" means the capability of an institution to

restore its financial position following a significant deterioration;

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

by an institution in accordance with regulation 5;

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

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

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

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

November 2010 establishing a European Supervisory Authority

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

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

from time to time, and includes any implementing measures that

have been or may be issued thereunder;

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

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

on OTC derivatives, central counterparties and trade repositories,

as amended from time to time, and includes any implementing

measures that have been or may be issued thereunder;

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

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

means Additional Tier 1 instruments and Tier 2 instruments;

"relevant parent institution" means a parent institution in a

Member State, a Union parent institution, a financial holding

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

holding company, a parent financial holding company in a Member

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

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

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

tool is applied;

"relevant third-country authority" means an authority established

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

comparable to those of the Resolution Committee or the Authority

pursuant to these regulations;

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

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

the resolution objectives referred to in regulation 31(2);

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

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

"entity" in this sub-regulation under resolution pursuant to

regulations 32 or 33, the application of a resolution tool, or the

exercise of one or more resolution powers;

"resolution college" means a college established in accordance

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

88(1);

"Resolution Committee" means the committee responsible for

resolution, as established in the Act;

"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;

"resolution objectives" means the resolution objectives referred

to in regulation 31(2);

"resolution plan" means a resolution plan for an institution drawn

up in accordance with regulation 10;

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

to 72;

"resolution tool" means a resolution tool referred to in regulation

37(3);

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

transfer by the Resolution Committee of shares or other

instruments of ownership issued by an institution under resolution,

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

purchaser that is not a bridge institution, in accordance with

regulation 38;

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

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

charge, pledge or lien, or collateral arrangements including

liabilities arising from repurchase transactions and other title

transfer collateral arrangements;

"senior management" means senior management as defined in

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

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

more claims or obligations owed between the institution under

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

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

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

of the CRD;

"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;

"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);

"supervisory college" means a college of supervisors established

in accordance with Article 116 of the CRD;

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

the potential to have serious negative consequences for the internal

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

markets and infrastructure may be potentially systemically

important to some degree;

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

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

provision that suspends, modifies or extinguishes an obligation of a

party to the contract or a provision that prevents an obligation

under the contract from arising that would otherwise arise;

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

EEA state;

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

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

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

institution;

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

parent financial holding company or a parent mixed financial

holding company, established in a third country;

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

i n a c o u n t r y o r t e r r i t o r y t h a t i s n o t a M e m b e r St a t e a n d i s

responsible for carrying out functions comparable to those of the

Authority pursuant to these regulations;

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

i n a c o u n t r y o r t e r r i t o r y t h a t i s n o t a M e m b e r St a t e a n d i s

responsible for carrying out functions comparable to those of the

Resolution Committee pursuant to these regulations;

"third-country resolution proceedings" means an action under the

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

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

in terms of objectives and anticipated results, to resolution actions

under these regulations;

"Tier 2 instruments" means capital instruments or subordinated

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

"title transfer financial collateral arrangement" means a title

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

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

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

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

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

combination of those items from an institution under resolution to a

recipient;

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

third-country institution;

"Union parent financial holding company" means an EU parent

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

of the CRR;

"Union parent institution" means an EU parent institution as

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

"Union parent mixed financial holding company" means an EU

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

Article 4(1) of the CRR;

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

Union parent financial holding company or a Union parent mixed

financial holding company;

"Union State aid framework" means the framework established

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

the European Union and regulations and all Union acts, including

guidelines, communications and notices, made or adopted pursuant

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

the European Union;

"Union subsidiary" means an institution which is established in a

Mem ber Stat e and which is a subsid iary of a thi rd-count ry

institution or a third-country parent undertaking;

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

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

"entity" in this sub-regulation;

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

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

63(1).

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

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

same meaning assigned to them as in the Act.

(3)

These regulations shall apply to

(a) institutions that are established in the European Union;

(b) financial institutions that are established in the Union

when the financial institution is a subsidiary of a credit

institution or investment firm, or of a company

referred to in paragraphs (c) and (d), and is covered by

the supervision of the parent undertaking on a

consolidated basis in accordance with Articles 6 to 17

of the CRR;

(c) financial holding companies, mixed financial holding

companies and mixed-activity holding companies that

are established in the European Union;

(d) parent financial holding companies in a Member State,

Union parent financial holding companies, parent

mixed financial holding companies in a Member State,

Union parent mixed financial holding companies;

(e) branches of institutions that are established outside the

Union in accordance with the specific conditions laid

down in these regulations.

(1

It shall be the duty of the Resolution Committee to

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

these regulations. The Resolution Committee shall be empowered

to apply the resolution tools and exercise the resolution powers.

(2)

The Resolution Committee shall have the power to

(a) remove and replace the senior management and

directors and recover monies from responsible

persons;

(b) appoint a temporary administrator to take control of

and manage the affected institution with the objective

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

ongoing and sustainable viability;

(c) require, where necessary, the adoption of appropriate

measures such as a change to an institution’s business

practices, structure or organization;

(d) operate and resolve the institution, including

terminating contracts, continuing or assigning

contracts, purchase or sell assets, write-down debt and

take any other action necessary to restructure or wind

down the institution’s operations;

(e) ensure continuity of critical services and functions by

requiring other companies in the same group to

continue to provide essential services to the entity in

resolution, any successor or an acquiring entity;

(f)

ensure that the residual entity in resolution can

temporarily provide critical services to a successor or

an acquiring entity or procuring necessary services

from unaffiliated third parties;

(g) override rights of shareholders of the institution in

resolution, including the requirement for approval by

shareholders of particular transactions in order to

permit a merger, acquisition, sale of substantial

business operations, recapitalization or other measures

to restructure and dispose of the institution’s business

or its liabilities and assets;

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

obligations, including deposit liabilities and ownership

in shares, to a solvent third party, notwithstanding any

requirements for consent or novation that would

otherwise apply;

(i)

make a rapid valuation of assets and liabilities of a

failing entity;

(j)

establish a temporary bridge institution to take over

and continue operating certain critical functions and

viable operations of a failed institution;

(k) establish a separate asset management vehicle and

transfer to the vehicle for management and run-down

non-performing loans or difficult-to-value assets;

(l)

carry out bail-in within resolution as a means to

achieve or help achieve continuity of critical functions

either by recapitalizing the entity that is no longer

viable, or by capitalizing a newly established entity or

bridge institution to which these functions have been

transferred following closure of the non-viable

institutions;

(m) temporarily stay the exercise of early termination

rights that may otherwise be triggered upon entry of an

institution into resolution or in connection with the use

of resolution powers;

(n) impose a moratorium with a suspension of payments to

unsecured creditors and customers, other than for

payments and property transfers to central

counterparties and those entered into the payment,

clearing and settlement systems, and to stay on

creditor actions to attach assets or otherwise collect

money or property from the institution, while

protecting the enforcement of eligible netting and

collateral arrangements;

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

respected;

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

part of a failing institution with timely pay out or

transfer of insured deposits and prompt access to

transaction accounts and to safeguard client funds.

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

Committee shall adopt and make public any necessary relevant

internal rules, including rules regarding professional secrecy and

information exchanges between the different functional areas.

(4) The Resolution Committee shall cooperate closely with the

Authority in the preparation, planning and application of resolution

decisions.

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

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

decisions that may have a direct fiscal impact or which have

systemic implications. The Resolution Committee shall inform the

Minister responsible for finance of any decisions taken pursuant to

the Act where transposing the BRRD or to these regulations.

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

Committee in accordance with the Act transposing the BRRD and

these regulations, shall take into account the potential impact of

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

group operates and shall minimise the negative effect on the

financial stability and negative economic and social effects in those

Member States.

(7) The Resolution Committee shall have the expertise,

resources and operational capacity to apply resolution actions, and

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

that is necessary to achieve the resolution objectives.

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

specific functions and responsibilities.

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

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

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

status; its interconnectedness to other institutions or to the financial

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

membership of an IPS or other cooperative mutual solidarity

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

exercise of investment services or activities as defined in point (2)

of Article 4(1) of Directive 2014/65/EU, and whether its failure and

subsequent winding up under normal insolvency proceedings

would be likely to have a significant negative effect on financial

markets, on other institutions, on funding conditions, or on the

wider economy, the Authority and the Resolution Committee shall

determine

(a) the contents and details of recovery and resolution

plans provided for in regulations 5 to 12;

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

plans are to be drawn up and the frequency for

updating recovery and resolution plans which may be

lower than that provided for in regulation 5(2),

regulation 7(5), regulation 10(6) and regulation 13(5);

(c) the contents and details of the information required

from institutions as provided for in regulation 5(5) and

(6), regulation 11(1) and regulation 12(2) and in

Sections A and B of the Schedule to these regulations;

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

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

the Schedule to these regulations.

(2) The Authority and the Resolution Committee shall make

t h e a s s e s sm en t r e f e r r e d t o i n s u b - r e g u l a t i o n ( 1 ) f o l l o w i n g

consultation with the Central Bank.

(3) Where the Authority or the Resolution Committee apply

simplified obligations on an institution, the Authority or the

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

simplified obligations at any time

RECOVERY AND RESOLUTION

Provided that where simplified obligations are imposed, the

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

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

powers to take a crisis prevention measure or a crisis management

measure.

(4) The Authority and the Resolution Committee shall inform

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

app lied to i nst itut ions l icensed un der t he Banki ng A ct and

Investment Services Act.

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

where relevant, the Resolution Committee may waive the

application of

(a) the requirements of regulations 5 to 14 to institutions

affiliated to a central body and wholly or partially

exempted from prudential requirements in accordance

with Article 10 of the CRR;

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

which are members of an IPS.

(6)

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

g r a n t e d , t h e A u t h o r i t y, o r w h e r e r e l e v a n t , t h e

Resolution Committee shall

(i)

apply the requirements of regulations 5 to 14 on

a consolidated basis to the central body and

institutions affiliated to it within the meaning of

Article 10 of the CRR;

(ii) require the IPS to fulfil the requirements of

regulations 5 to 9 in cooperation with each of its

waived members.

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

regulations 5 to 14 to a group shall include a central

body and institutions affiliated to it within the meaning

of Article 10 of the CRR and their subsidiaries, and

any reference to parent undertakings or institutions

that are subject to consolidated supervision pursuant to

regulation 3 of the Supervisory Consolidation

Regulations, shall include the central body.

(7)

(a) Institutions subject to direct supervision by the

European Central Bank pursuant to Article 6(4) of

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

2013 conferring specific tasks on the European Central

Bank concerning policies relating to the prudential

supervision of credit institutions or which constitutes a

significant share in the financial system of Malta shall

draw up their own recovery plans in accordance with

regulations 5 to 9 and shall be subject to individual

resolution plans in accordance with regulations 10 to

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

of an institution shall be considered to constitute a

significant share of Malta’s financial system if any of

the following conditions are met

(i)

the total value of its assets exceeds EUR 30 000

000 000; or

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

exceeds 20%, unless the total value of its assets

is below EUR 5 000 000 000.

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

consolidated supervision pursuant to regulations 3 and 4 of the

Supervisory Consolidation Regulations, shall draw up and maintain

a r e c o v e r y p l a n p r o v i di n g f o r m e a s u r e s t o be t a k e n b y t h e

institution to restore its financial position following a significant

deterioration of its financial situation. Recovery plans shall be

considered to be a governance arrangement within the meaning of

article 17B of the Banking Act for credit institutions and the

Investment Services Rules for Investment Services Providers for

investment firms.

(2) Institutions shall update their recovery plans at least

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

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

have a material effect on, or necessitates a change to, the recovery

plan. The Authority may require institutions to update their

recovery plans more frequently.

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

extraordinary public financial support.

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

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

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

identify those assets which would be expected to qualify as

collateral.

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

ensure that the recovery plans include the information listed in

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

additional information which may be required by the Authority on a

case by case basis.

(6) Recovery plans shall also include possible measures which

could be taken by the institution where the conditions for early

intervention under regulation 27 are met.

(7) Recovery plans shall include appropriate conditions and

procedures to ensure the timely implementation of recovery actions

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

range of scenarios of severe macroeconomic and financial stress

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

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

groups.

(8) The Authority may require an institution to maintain

detailed records of financial contracts to which the institution

concerned is a party to.

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

approve the recovery plan before submitting it to the Authority.

6. (1) Institutions required to draw up recovery plans under

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

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

satisfaction of the Authority that those plans meet the criteria set

out in sub-regulation (2).

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

of each recovery plan, and after consulting the relevant European

regulatory authorities where significant branches are located,

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

laid down in regulation 5 and the following criteria

(a) the implementation of the arrangements proposed in

the plan is reasonably likely to maintain or restore the

viability and financial position of the institution or of

the group, taking into account the preparatory

measures that the institution has taken or has planned

to take;

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

reasonably likely to be implemented quickly and

effectively in situations of financial stress and

avoiding to the maximum extent possible any

significant adverse effect on the financial system,

including in scenarios which would lead other

institutions to implement recovery plans within the

same period.

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

the Authority shall take into consideration the appropriateness of

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

complexity of the organisational structure and the risk profile of the

institution.

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

Resolution Committee. The Resolution Committee shall examine

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

recovery plan which may adversely impact the resolvability of the

institution and make recommendations to the Authority with regard

to those matters.

(5)

(a) Where the Authority assesses that there are material

deficiencies in the recovery plan, or material

impediments to its implementation, it shall notify the

institution or the parent undertaking of the group of its

assessment and require the institution to submit, within

two months, extendable with the Authority’s approval

by one month, a revised plan demonstrating how those

deficiencies or impediments are addressed

Provided that, before requiring an institution to

resubmit a recovery plan, the Authority shall give the

institution the opportunity to state its opinion on that

requirement.

(b) Where the Authority does not consider the deficiencies

and impediments to have been adequately addressed

by the revised plan, it may direct the institution to

make specific changes to the plan.

(6)

(a) If the institution fails to submit a revised recovery

plan, or if the Authority determines that the revised

recovery plan does not adequately remedy the

deficiencies or potential impediments identified in its

original assessment, and it is not possible to adequately

remedy the deficiencies or impediments through a

direction to make specific changes to the plan, the

Authority shall require the institution to identify within

a reasonable time-frame changes it can make to its

business in order to address the deficiencies in or

impediments to the implementation of the recovery

plan.

(b) If the institution fails to identify such changes within

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

competent authority assesses that the actions proposed

by the institution would not adequately address the

deficiencies or impediments, the Authority may direct

the institution to take any measures it considers to be

necessary and proportionate, taking into account the

seriousness of the deficiencies and impediments and

the effect of the measures on the institution’s business.

(c) The Authority may, without prejudice to regulation 9

of the Banking Act (Supervisory Review) Regulations

and regulation 16 of the Investment Services Act

(Supervisory Review) Regulations, direct the

institution to

(i)

reduce the risk profile of the institution,

including liquidity risk;

(ii) enable timely recapitalisation measures;

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

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

improve the resilience of the core business lines

and critical functions;

(v) make changes to the governance structure of the

institution

Provided that such measures do not preclude the Authority

from taking additional measures under Maltese law.

(7) When the Authority requires an institution to take measures

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

reasoned and proportionate, and the decision shall be notified in

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

7. (1) Union parent undertakings shall draw up and submit to

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

recovery plan. Group recovery plans shall consist of a recovery

plan for the group headed by the Union parent undertaking as a

whole. The group recovery plan shall identify measures that may be

required to be implemented at the level of the Union parent

undertaking and each individual subsidiary.

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

subsidiaries to draw up and submit recovery plans on an individual

basis.

(3) The Authority where it is the consolidating supervisor

shall, provided that the confidentiality requirements laid down in

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

(a) the relevant authorities referred to in regulations 6 and

7 of the Supervisory Consolidation Regulations;

(b) the European regulatory authorities where significant

branches are located insofar as is relevant to that

branch;

(c) the group-level resolution authority; and

(d) the European resolution authorities of subsidiaries.

(4)

(a) The group recovery plan shall aim to achieve the

stabilisation of the group as a whole, or any institution

of the group, when it is in a situation of stress so as to

address or remove the causes of the distress and restore

the financial position of the group or the institution in

question, at the same time taking into account the

financial position of other group entities.

(b) The group recovery plan shall include arrangements to

ensure the coordination and consistency of measures to

be taken at the level of the Union parent undertaking,

at the level of the entities referred to in paragraphs (c)

and (d) of the definition "entity" in regulation 2(1), as

well as measures to be taken at the level of

subsidiaries and, where applicable, in accordance with

the CRD at the level of significant branches.

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

individual subsidiary, shall include the elements specified in

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

intra-group financial support adopted pursuant to an agreement for

intra-group financial support that has been concluded in accordance

with regulations 19 to 26.

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

options setting out actions to address those scenarios provided for

in regulation 5(7)

Provided that for each of the scenarios, the group recovery

plan shall identify whether there are obstacles to the

implementation of recovery measures within the group, including

at the level of individual entities covered by the plan, and whether

there are substantial practical or legal impediments to the prompt

transfer of own funds or the repayment of liabilities or assets within

the group.

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

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

approve the group recovery plan before submitting it to the

Authority, where it is the consolidating supervisor.

8. (1)

The Authority shall

(a) where it is the consolidating supervisor, together with

the European regulatory authorities of subsidiaries; or

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

the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any,

after consulting the authorities referred to in regulation 7 of the

Supervisory Consolidation Regulations and with the European

regulatory authorities of significant branches insofar as is relevant

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

the extent to which it satisfies the requirements and criteria laid

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

accordance with the procedure established in regulation 6 and with

this regulation and shall take into account the potential impact of

the recovery measures on financial stability in Malta and in all the

Member States where the group operates.

(2)

The Authority shall endeavour to reach a joint decision

(a) where it is the consolidating supervisor, together with

the European regulatory authorities of subsidiaries; or

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

the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any, on

(i)

the review and assessment of the group recovery

plan;

(ii) whether a recovery plan on an individual basis

shall be drawn up for institutions that are part of

the group; and

(iii) the application of the measures referred to in

regulation 6(5) and (6)

Provided that the parties shall reach a joint decision within

four months from the date of the transmission by the consolidating

supervisor of the group recovery plan in accordance with regulation

7(3)

Provided further that the Authority may also request the

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

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

Regulation (EU) No 1093/2010.

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

absence of a joint decision between the authorities mentioned in

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

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

measures the Union parent undertaking is required to take in

accordance with regulation 6(5) and (6), the Authority shall make

its own decision with regard to those matters. The Authority, where

it is the consolidating supervisor, shall make its decision having

taken into account the views and reservations of the relevant

European regulatory authorities expressed during the four-month

period. The Authority, where it is the consolidating supervisor shall

notify the decision to the Union parent undertaking and to the other

relevant European regulatory authorities

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

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

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

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

where it is the consolidating supervisor, shall defer its decision and

await any decision that the EBA may take in accordance with

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

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

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

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

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

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

within one month, the decision of the Authority as the

consolidating supervisor shall apply.

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

s u b s i d i a r y, i n t h e a b s e n c e o f a j o i n t d e c i s i o n b e t w e e n t h e

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

the date of transmission on

(a) whether a recovery plan on an individual basis is to be

drawn up for the institutions under its jurisdiction; or

(b) the application at subsidiary level of the measures

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

the Authority shall make its own decision on that matter

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

the European regulatory authorities concerned have referred a

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

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

where it is responsible for the supervision of the subsidiary, shall

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

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

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

month period shall be deemed to be the conciliation period within

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

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

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

made by the EBA within one month, the decision of the Authority,

where it is responsible for the supervision of the subsidiary at an

individual level, shall apply.

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

taken by a relevant European regulatory authority responsible for a

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

Authority and the other European regulatory authorities which did

not disagree with such a decision, may reach a joint decision on a

group recovery plan covering entities licensed in terms of the

Banking Act and the Investment Services Act, as well as those

e n t i t i e s a u t h o r i se d b y t h e E u r o p ea n r e g u l a t o r y a u t h o r i t i e s

mentioned in this sub-regulation.

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

and any decision taken by the European regulatory authorities in

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

(4) of the BRRD shall be recognised as conclusive and shall be

applied by the Authority in Malta.

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

transmission, request the EBA to assist the authorities mentioned in

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

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

the assessment of recovery plans and implementation of the

measures of paragraphs (c)(i), (ii) and (iv) of regulation 6(6). The

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

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

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

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

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

regulatory authority acting as the consolidating supervisor taken in

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

regulatory authorities responsible for subsidiaries taken in

accordance with Article 8(4) of the BRRD shall apply.

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

plan shall include a framework of indicators established by the

institution which identifies the points at which appropriate actions

referred to in the plan may be taken.

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

making the assessment of the recovery plans in accordance with

regulations 6 and 8.

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

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

of being monitored easily.

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

appropriate arrangements for the regular monitoring of the

indicators.

(5)

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

may

(a) take action under its recovery plan where the relevant

indicator has not been met, but where the board of

directors of the institution considers it to be

appropriate in the circumstances; or

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

directors of the institution does not consider it to be

appropriate in the circumstances of the situation.

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

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

to the Authority without delay.

10. (1) The Resolution Committee, after consulting the

Authority and after consulting the European resolution authorities

of the jurisdictions in which any significant branches are located

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

resolution plan for each institution that is not part of a group

subject to consolidated supervision pursuant to regulations 3 and 4

of the Supervisory Consolidation Regulations. The resolution plan

shall provide for the resolution actions which the Resolution

Committee may take where the institution meets the conditions for

resolution. Information referred to in sub-regulation (7)(a) shall be

disclosed to the institution concerned.

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

Committee shall identify any material impediments to resolvability

and, where necessary and proportionate, outline relevant actions for

how those impediments could be addressed, according to

regulations 15 to 18.

(3) The resolution plan shall take into consideration relevant

scenarios including that the event of failure may be idiosyncratic or

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

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

(a) extraordinary public financial support besides the use

of the financing arrangements established in

accordance with regulation 100;

(b) any central bank emergency liquidity assistance; or

(c) any central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate

terms.

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

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

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

assets which would be expected to qualify as collateral.

(5) The Resolution Committee may require institutions to assist

them in the drawing up and updating of the plans.

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

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

legal or organisational structure of the institution or to its business

or its financial position that could have a material effect on the

effectiveness of the plan or otherwise necessitates a revision of the

resolution plan

Provided further that, the review referred to in this sub-

regulation shall be carried out after the implemenation of resolution

actions or the exercise of powers referred to in regulation 59.

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

set out options for applying the resolution tools and resolution

powers referred to in Title IV of the BRRD to the institution. It

shall include, quantified whenever appropriate and possible

(a) a summary of the key elements of the plan;

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

that have occurred after the latest resolution

information was filed;

(c) a demonstration of how critical functions and core

business lines could be legally and economically

separated, to the extent necessary, from other functions

so as to ensure continuity upon the failure of the

institution;

(d) an estimation of the time-frame for executing each

material aspect of the plan;

(e) a detailed description of the assessment of

resolvability carried out in accordance with sub-

regulation (2) and with regulation 15;

(f)

a description of any measures required pursuant to

regulation 17 to address or remove impediments to

resolvability identified as a result of the assessment

carried out in accordance with regulation 15;

(g) a description of the processes for determining the

value and marketability of the critical functions, core

business lines and assets of the institution;

(h) a detailed description of the arrangements for ensuring

that the information required pursuant to regulation 11

is up to date and at the disposal of the Resolution

Committee at all times;

(i)

an explanation by the Resolution Committee as to how

the resolution options could be financed without the

assumption of any of the following

(i)

extraordinary public financial support besides

the use of the financing arrangements

established in accordance with regulation 100;

(ii) any central bank emergency liquidity assistance;

or

(iii) any central bank liquidity assistance provided

under non-standard collateralisation, tenor and

interest rate terms;

(j)

a detailed description of the different resolution

strategies that could be applied according to the

different possible scenarios and the applicable time-

scales;

(k) a description of critical interdependencies;

(l)

a description of options for preserving access to

payments and clearing services and other

infrastructures and, an assessment of the portability of

clients positions;

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

of the institution, including an assessment of any

associated costs, and a description of envisaged

procedures to consult staff during the resolution

process, taking into account national systems for

dialogue with social partners where applicable;

(n) a plan for communicating with the media and the

public;

(o) the requirements referred to in regulations 45E and 45F

and a deadline to reach that level in accordance with

regulation 45L;

(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;

(q) a description of essential operations and systems for

maintaining the continuous functioning of the

institution’s operational processes;

(r) where applicable, any opinion expressed by the

institution in relation to the resolution plan.

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.

(8) The Resolution Committee may require an institution and

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

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

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

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

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

regulation 2(1) is to be capable of producing those records. The

same time-limit shall apply to all institutions and all entities

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

regulation 2(1) under its jurisdiction. The Resolution Committee

may decide to set different time-limits for different types of

financial contracts as referred to in the definition "financial

contracts" under regulation 2(1). This sub-regulation shall not

affect the information gathering powers of the Authority.

11. (1) The Resolution Committee may require institutions to

(a) cooperate as much as necessary in the drawing up of

resolution plans;

(b) provide them, either directly or through the Authority,

with all of the information necessary to draw up and

implement resolution plans.

In particular the Resolution Committee may require, among

other information, the information and analysis specified in Section

B of the Schedule to these regulations.

(2) The Authority shall cooperate with the Resolution

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

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

information is available, the Authority shall provide that

information to the Resolution Committee.

12. (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.

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

the information provided pursuant to regulation 11.

(3)

The group resolution plan shall

(a) set out the resolution actions 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;

(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;

(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;

(c) where a group includes entities incorporated in third

countries, identify appropriate arrangements for

cooperation and coordination with the relevant

authorities of those third countries and the

implications for resolution within the European Union;

(d) identify measures, including the legal and economic

separation of particular functions or business lines,

that are necessary to facilitate group resolution when

the conditions for resolution are met;

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

regulations, which the relevant European resolution

authorities intend to take in relation to the entities within

each resolution group;

(f)

identify how the group resolution actions could be

financed and, where the financing arrangement would

be required, set out principles for sharing

responsibility for that financing between sources of

funding in different Member States. The plan shall not

assume any of the following

(i)

extraordinary public financial support besides

the use of the financing arrangements

established in accordance with regulation 100;

(ii) central bank emergency liquidity assistance; or

(iii) central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest

rate terms

Provided that those principles shall be set out on the basis

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

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

Malta and in all the Member States concerned.

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

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

drawing up and updating of the group resolution plan in accordance

with this regulation. A detailed description of the assessment of

resolvability carried out in accordance with Article 16 of the BRRD

shall be included in the group resolution plan.

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

impact on any Member State.

13. (1) Where the Resolution Committee acts as the group-

level resolution authority, Union parent undertakings shall submit

the information that may be required in accordance with regulation

11 to the Resolution Committee. That information shall concern the

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

group entities including entities referred to in paragraphs (c) and

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

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

resolution authority shall, provided that confidentiality

requirements laid down in these regulations are in place, transmit

the information provided in accordance with this regulation to

(a) the EBA;

(b) the Authority;

(c) the European resolution authorities of subsidiaries;

(d) the European resolution authorities of the jurisdictions

in which significant branches are located insofar as is

relevant to the significant branch;

(e) the relevant authorities referred to in regulations 6 and

7 of the Supervisory Consolidation Regulations; and

(f)

the European resolution authorities of the Member

States where the entities referred to in paragraphs (c)

and (d) of the definition "entity" in regulation 2(1) are

established.

(3) The information provided by the Resolution Committee in

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

resolution authorities and European regulatory authorities of

subsidiaries, European resolution authorities of the jurisdiction in

which any significant branches are located, and to the relevant

authorities referred to in regulations 6 and 7 of the Supervisory

Consol idation Regulations, shall include as a minim um all

information that is relevant to the subsidiary or significant branch.

The information provided to the EBA shall include all information

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

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

subsidiaries, the Resolution Committee in its capacity as group-

level resolution authority shall not be obliged to transmit that

information without the consent of the relevant third-country

authority.

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

resolution authority, shall act jointly with the European resolution

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

and after consulting the Authority, where relevant, and the relevant

European regulatory authorities, including the European regulatory

authorities in which any significant branches are located, draw up

and maintain group resolution plans. The Resolution Committee in

it s c a p a c i ty a s g r ou p -l e v e l r e s o lu t io n au th o ri t y m a y, a t it s

discretion, and subject to it meeting the confidentiality

requirements laid down in regulation 98, involve in the drawing up

and maintenance of group resolution plans third-country resolution

authorities of jurisdictions in which the group has established

subsidiaries or financial holding companies or significant branches

as referred to in Article 51 of the CRD.

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

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

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

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

financial position of the group including any group entity, that

could have a material effect on or require a change to the plan.

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

form of a joint decision

(a) where the Resolution Committee is the group-level

resolution authority, of the Resolution Committee and

the European resolution authorities of subsidiaries; or

(b) where the resolution authority is responsible for a

subsidiary, of the Resolution Committee, the European

resolution authority acting as the group-level

resolution authority, and the European resolution

authorities of other subsidiaries, if any

Provided that, the joint decision shall be made within

four months of the date of the transmission by the

group-level resolution authority of the information

referred to in sub-regulation (2)

Provided further that, the Resolution Committee may

also request the EBA to assist the authorities

mentioned in this sub-regulation in reaching a joint

decision in accordance with Article 31(c) of

Regulation (EU) No 1093/2010

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.

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

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

Resolution Committee and the European resolution authorities of

subsidiaries within four months, the Resolution Committee shall

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

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

reservations of the relevant European resolution authorities. The

decision shall be provided to the Union parent undertaking by the

Resolut ion Co mm ittee acting as the group-l evel resolut ion

authority

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

the Resolution Committee is the group-level resolution authority,

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

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

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

the Resolution Committee in its capacity as the group-level

resolution authority shall defer its decision and await any decision

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

Regulation, and shall take its decision in accordance with the

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

the conciliation period within the meaning of that Regulation. The

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

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

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

Resolution Committee in its capacity as the group-level resolution

authority shall apply.

(8) Where the Resolution Committee is responsible for a

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

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

Committee shall, 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

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

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

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

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

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

Committee shall defer its decision and await any decision that the

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

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

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

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

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

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

d e c i s i o n w i t h i n o n e m o n t h , t h e d e c i s i o n o f t he R e s o l u t io n

Committee, where it is responsible for a subsidiary, shall apply.

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

decision taken by a relevant European resolution author ity

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

BRRD, the Resolution Committee and the other European

resolution authorities which do not disagree with such a decision

may reach a joint decision on a group resolution plan covering

entities licensed in terms of the Banking Act and the Investment

Services Act as well as those entities authorised by the European

regulatory authorities mentioned in this sub-regulation.

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

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

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

(6) of the BRRD, shall be recognised as conclusive and applied by

the Resolution Committee.

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

date of transmission, request the EBA to assist the authorities

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

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

unless the Resolution Committee assesses that the subject matter

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

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

conciliation period within the meaning of Regulation (EU) No

1093/2010. The matter shall not be referred to the EBA after the

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

reached. In the absence of an EBA decision within one month, the

decisions of the European resolution authority acting as the group-

level resolution authority taken in accordance with Article 13(5) of

t h e B R R D a n d , o r, o f t h e E u r o p e a n r e s o l u t i o n a u t h o r i t i e s

responsible for subsidiaries taken in accordance with Article 13(6)

of the BRRD shall apply.

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

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

r e s o l u t i o n a u t h o r i t y, a s s e s s e s t h a t t h e s u b j e c t m a t t e r o f a

disagreement regarding group resolution plans impinges on the

fiscal responsibilities of Malta or of its Member State respectively,

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

resolution authority, shall initiate a reassessment of the group

resolution plan, including the minimum requirement for own funds

and eligible liabilities.

14. (1) The Resolution Committee shall transmit the

resolution plans and any changes thereto to the Authority and the

relevant European regulatory authorities.

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

resolution authority shall transmit group resolution plans and any

changes thereto to the Authority and the relevant European

regulatory authorities.

(1) After the Resolution Committee has consulted with the

Authority and the European resolution authorities of the

jurisdictions in which significant branches are located insofar as is

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

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

assumption of any of the following

(a) extraordinary public financial support besides the use

of the financing arrangements established in

accordance with regulation 100;

(b) central bank emergency liquidity assistance;

(c) central bank liquidity assistance provided under non-

standard collateralisation, tenor and interest rate

terms

Provided that an institution shall be deemed to be

r es o l v a b l e i f i t i s f e a s i b l e a n d c r e d i b l e f o r t h e R e s o l u t i o n

Committee to either liquidate it under normal insolvency

proceedings or to resolve it by applying the different resolution

tools and powers to the institution while avoiding to the maximum

extent possible any significant adverse effect on the financial

system, including in circumstances of broader financial instability

or system wide events, of Malta, or other Member States or the

European Union and with a view to ensuring the continuity of

critical functions carried out by the institution. The Resolution

Committee shall notify the EBA in a timely manner whenever an

institution is deemed not to be resolvable.

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

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

minimum, examine the matters specified in Section C of the

Schedule to these regulations.

(3) The resolvability assessment under this regulation shall be

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

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

accordance with regulation 10.

(1) The Resolution Committee -

(a) where it is the group-level resolution authority,

together with the European resolution authorities of

subsidiaries; or

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

the European resolution authority acting as the group-

level resolution authority and the European resolution

authorities of other subsidiaries, if any,

after consulting the Authority and the European regulatory

authorities in their capacity as either the consolidating supervisor,

or where responsible for such subsidiaries, and the European

resolution authorities of the jurisdictions in which significant

branches are located insofar as is relevant to the significant branch,

shall assess the extent to which groups are resolvable without the

assumption of any of the following

(i)

extraordinary public financial support besides

the use of the financing arrangements

established in accordance with regulation 100;

(ii) central bank emergency liquidity assistance;

(iii) central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest

rate terms

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

feasible and credible for the Resolution Committee and the relevant

European resolution authorities to either wind up group entities under

normal insolvency proceedings or to resolve group entities by

applying resolution tools and powers to 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.

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

the Resolution Committee shall, as a minimum, examine the

matters specified in Section C of the Schedule to these regulations

Provided that the assessment of group resolvability under

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

purposes of drawing up and updating of the group resolution plans

in accordance with regulation 12. The assessment shall be made

under the decision-making procedure laid down in regulation 13.

(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.

(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 price volatility of the own

funds instruments 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

RECOVERY AND RESOLUTION

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.

(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.

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

resolution plans or for the Resolution Committee and the relevant

European resolution authorities to reach a joint decision on group

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

respectively shall be suspended following the notification referred

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

substantive impediments to resolvability have been accepted by the

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

pursuant to sub-regulation (4).

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

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

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

Committee shall have the power to take any of the following

measures

(a) require the entity to revise any intra-group financing

agreements or review the absence thereof, or draw up

service agreements, whether intra-group or with third

parties, to cover the provision of critical functions;

(b) require the entity to limit its maximum individual and

aggregate exposures;

(c) impose specific or regular additional information

requirements relevant for resolution purposes;

(d) require the entity to divest specific assets;

(e) require the entity to limit or cease specific existing or

proposed activities;

(f)

restrict or prevent the development of new or existing

business lines or sale of new or existing products;

(g) require changes to legal or operational structures of

the entity or any group entity, either directly or

indirectly under its control, so as to reduce complexity

in order to ensure that critical functions may be legally

and operationally separated from other functions

through the application of the resolution tools;

(h) require an entity or a parent undertaking to set up a

parent financial holding company in a Member State or

a Union parent financial holding company;

(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;

(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;

(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);

(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.

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

meet the following requirements

(a) it shall be supported by reasons for the assessment or

determination in question;

(b) it shall indicate how that assessment or determination

complies with the requirement for proportionate

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

(c) it shall be subject to a right of appeal.

(7)

Before identifying any measure referred to in sub-regulation

(4), the Resolution Committee, after consulting the Authority and, if

appropriate, the Central Bank, shall duly consider the potential effect

of those measures on the particular entity, on the internal market for

financial services, and on the financial stability in other Member States

and in the Union as a whole.

(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

g r o u p - l e v e l r e s o l u t i o n a u t h o r i t y, i n c o o p e r a t i o n w i t h t h e

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

per c e nt a g e o f t he t ot a l r i s k ex po s u re a m o un t ca lc u l a te d 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 o f any observations by t he 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.

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

regulation (5) and any decision taken by European resolution

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

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

by the Resolution Committee.

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

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

17(5), the Resolution Committee may, within four months of the

date of submission of any observations made by the Union parent

u n d e r t a k i n g i n a c c o r d a n c e w i t h su b - r e g u l a t i o n ( 4 ) , a n d i n

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

to assist the authorities mentioned in sub-regulation (5) in reaching

an agreement in accordance with Article 19(3) of Regulation (EU)

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

conciliation period within the meaning of Regulation (EU) No

1093/2010. The matter shall not be referred to the EBA after the

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

reached. In the absence of an EBA decision within one month, the

decisions of the European resolution authority acting as the group-

level resolution authority taken in accordance with Article 18(6) of

t h e B R R D a n d , o r, o f t h e E u r o p e a n r e s o l u t i o n a u t h o r i t i e s

responsible for subsidiaries taken in accordance with Article 18(7)

of the BRRD shall apply.

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

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

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

a n o t h e r M e m b e r St a t e o r i n a t h i r d c o u n t r y a n d w h i c h a r e

institutions or financial institutions covered by the consolidated

supervision of the parent undertaking, may enter into an agreement

to provide financial support to any other party to the agreement that

meets the conditions for early intervention pursuant to regulation

27, provided that the conditions laid down in this regulation and in

regulations 20 to 26 are satisfied.

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

intra-group financial arrangements including funding arrangements

and the operation of centralised funding arrangements provided

that none of the parties to such arrangements meets the conditions

for early intervention.

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

prerequisite

(a) to provide group financial support to any group entity

that experiences financial difficulties if the institution

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

to the group policies if it does not represent a risk for

the whole group; or

(b) to operate in a Member State.

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

financial support transactions that are undertaken in accordance

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

prohibited

Provided that, this regulation and regulations 20 to 26 shall

not prevent the imposition of limitations on intra-group

transactions in connection with Maltese law exercising the options

provided for in the CRR, transposing the CRD or requiring the

separation of parts of a group or activities carried on within a group

for reasons of financial stability.

(5)

The group financial support agreement may

(a) cover one or more subsidiaries of the group, and may

provide for financial support from the parent

undertaking to subsidiaries, from subsidiaries to the

parent undertaking, between subsidiaries of the group

that are party to the agreement, or any combination of

those entities;

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

provision of guarantees, the provision of assets for use

as collateral, or any combination of those forms of

financial support, in one or more transactions,

including between the beneficiary of the support and a

third party.

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

support agreement, a group entity agrees to provide financial

support to another group entity, the agreement may include a

reciprocal agreement by the group entity receiving the support to

provide financial support to the group entity providing the support.

(7) The group financial support agreement shall specify the

pri ncipl es f or the cal culati on o f t he consid eratio n, fo r any

transaction made under it. Those principles shall include a

requirement that the consideration shall be set at the time of the

provision of financial support. The agreement, including the

principles for calculation of the consideration for the provision of

financial support and the other terms of the agreement, shall

comply with the following principles

(a) each party must be acting freely in entering into the

agreement;

(b) in entering into the agreement and in determining the

consideration for the provision of financial support,

each party must be acting in its own best interests

which may take account of any direct or any indirect

benefit that may accrue to a party as a result of

provision of the financial support;

(c) each party providing financial support must have full

disclosure of relevant information from any party

receiving financial support prior to determination of

the consideration for the provision of financial support

and prior to any decision to provide financial support;

(d) the consideration for the provision of financial support

may take account of information in the possession of

the party providing financial support based on it being

in the same group as the party receiving financial

support and which is not available to the market; and

(e) the principles for the calculation of the consideration

for the provision of financial support are not obliged to

take account of any anticipated temporary impact on

market prices arising from events external to the

group.

(8) The group financial support agreement may only be

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

opinion of the Authority and the respective European regulatory

authorities of the parties to the group financial support agreement,

none of the parties meets the conditions for early intervention.

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

support agreement may be exercised only by the parties to the

agreement, with the exclusion of third parties.

(1) Where the Authority is the consolidating supervisor,

the Union parent institution shall submit to the Authority an

application for authorisation of any proposed group financial

support agreement proposed pursuant to regulation 19. The

application shall contain the text of the proposed agreement and

identify the group entities that propose to be parties.

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

forward without delay the application to the European regulatory

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

agreement, with a view to reaching a joint decision.

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

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

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

agreement are consistent with the conditions for financial support

set out in regulation 23.

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

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

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

considered to be inconsistent with the conditions for financial

support set out in regulation 23.

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

a joint decision

(a) where the Authority is the consolidating supervisor,

with the European regulatory authorities of

subsidiaries; or

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

with the European regulatory authority acting as the

consolidating supervisor and the European regulatory

authorities of other subsidiaries, if any,

taking into account the potential impact, including any fiscal

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

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

of the proposed agreement are consistent with the conditions for

financial support laid down in regulation 23 within four months of

the date of receipt of the application by the consolidating

supervisor. The joint decision shall be set out in a document

containing the fully reasoned decision, which, where the Authority

is the consolidating supervisor, shall be provided to the applicant

by the Authority

Provided that, the Authority may request the EBA to assist

the authorities mentioned in this sub-regulation in reaching an

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

1093/2010.

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

absence of a joint decision between the authorities mentioned in

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

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

document containing the full reasoning and shall take into account

the views and reservations of the other European regulatory

authorities expressed during the four-month period. The Authority

acting as the consolidating supervisor shall notify its decision to

the applicant and to the other European regulatory authorities.

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

receipt of the application by the consolidating supervisor, refer the

matter to the EBA in accordance with Article 19 of Regulation

(EU) No 1093/2010. The four-month period shall be deemed to be

the conciliation period within the meaning of that Regulation. The

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

month period or after a joint decision has been reached.

(8) Where the Authority is the consolidating supervisor, if, at

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

authorities concerned has referred the matter to the EBA in

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

Authority shall defer its decision and await any decision that the

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

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

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

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

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

after a joint decision has been reached.

(1) Any proposed agreement that has been authorised by

the Authority and the European resolution authorities concerned

shall be submitted for approval to the shareholders of every group

entity that proposes to enter into the agreement. In such a case, the

agreement shall be valid only in respect of those parties whose

shareholders have approved the agreement in accordance with sub-

regulation (2).

(2) A group financial support agreement shall be valid in

respect of a group entity only if its shareholders have authorised the

board of directors of that group entity to make a decision that the

group entity shall provide or receive financial support in

accordance with the terms of the agreement and in accordance with

the conditions laid down in regulations 19 to 26 and that

shareholder authorisation has not been revoked.

(3) The board of directors of each entity that is party to an

agreement shall report each year to the shareholders on the

RECOVERY AND RESOLUTION

performance of the agreement, and on the implementation of any

decision taken pursuant to the agreement.

The Authority shall transmit to the Resolution Committee

and to the relevant European resolution authorities, the authorised

group financial support agreements and any changes thereto.

Financial support by a group entity in accordance with

regulation 19 may only be provided if all the following conditions

are met

(a) there is a reasonable prospect that the support provided

significantly redresses the financial difficulties of the

group entity receiving the support;

(b) the provision of financial support has the objective of

preserving or restoring the financial stability of the

group as a whole or any of the entities of the group and

is in the interests of the group entity providing the

support;

(c) the financial support is provided on terms, including

consideration in accordance with regulation 19(7);

(d) there is a reasonable prospect, on the basis of the

information available to the board of directors of the

group entity providing financial support at the time

when the decision to grant financial support is taken,

that the consideration for the support will be paid and,

if the support is given in the form of a loan, that the

loan will be reimbursed, by the group entity receiving

the support. If the support is given in the form of a

guarantee or any form of security, the same condition

shall apply to the liability arising for the recipient if

the guarantee or the security is enforced;

(e) the provision of the financial support would not

jeopardise the liquidity or solvency of the group entity

providing the support;

(f)

the provision of the financial support would not create

a threat to financial stability: in particular in Malta,

where the group entity providing support is in Malta;

or, in particular in the Member State of such a group

entity providing support, where the group entity

providing support is not established in Malta;

(g) the group entity providing the support complies at the

time the support is provided with the requirements of

the CRD relating to capital or liquidity and any

requirements imposed pursuant to Article 104(2) of the

CRD and the provision of the financial support shall

not cause the group entity to infringe those

requirements, unless authorised

(i)

where the Authority is responsible for the

supervision on an individual basis of the entity

providing the support, by the Authority; or

(ii) where the Authority is not responsible for the

supervision on an individual basis of the entity

providing the support, by the European

regulatory authority responsible for such

supervision;

(h) the group entity providing the support complies, at the

time when the support is provided, with the

requirements relating to large exposures laid down in

the CRR and in the CRD including any national

legislation or any legislation in force in any other

Member State exercising the options provided therein,

and the provision of the financial support shall not

cause the group entity to infringe those requirements,

unless authorised by the Authority responsible for the

supervision on an individual basis of the group entity

providing the support;

(i)

the provision of the financial support would not

undermine the resolvability of the group entity

providing the support.

The decision to provide group financial support in

accordance with the agreement shall be taken by the board of

directors of the group entity providing financial support. That

decision shall be reasoned and shall indicate the objective of the

proposed financial support. In particular, the decision shall indicate

how the provision of the financial support complies with the

conditions laid down in regulation 23. The decision to accept group

financial support in accordance with the agreement shall be taken

by the board of directors of the group entity receiving financial

support.

(1) Before providing support in accordance with a group

financial support agreement, the board of directors of a group entity

that intends to provide financial support shall, where the Authority

is responsible for such a group entity, notify

(a) the Authority;

(b) where different from authorities in paragraphs (a) and

(c), where applicable, the European regulatory

authority acting as the consolidating supervisor;

(c) where different from paragraphs (a) and (b), the

European regulatory authority of the group entity

receiving the financial support; and

(d) the EBA.

The notification shall include the reasoned decision of the

board of directors in accordance with regulation 24 and details of

the proposed financial support including a copy of the group

financial support agreement.

(2) Within five business days from the date of receipt of a

complete notification, the Authority being the Authority of the

group entity providing financial support may agree with the

provision of financial support, or may prohibit or restrict it if it

assesses that the conditions for group financial support laid down

in regulation 23 have not been met. A decision of the Authority to

prohibit or restrict the financial support shall be reasoned.

(3) The decision of the Authority to agree, prohibit or restrict

the financial support shall be immediately notified to

(a) the consolidating supervisor being either the Authority

or an European regulatory authority;

(b) the European regulatory authority of the group entity

receiving the support; and

(c) the EBA

Provided that where the Authority is the consolidating

supervisor it shall immediately inform other members of the

supervisory college and the members of the resolution college.

(4) Where the Authority is the consolidating supervisor or

where the Authority is the Authority responsible for the group

entity receiving support and it has objections regarding the decision

to prohibit or restrict the financial support, it may within two days

refer the matter to the EBA and request its assistance in accordance

with Article 31 of Regulation (EU) No 1093/2010.

(5) If the Authority, as the Authority responsible for the group

entity providing financial support, does not prohibit or restrict the

financial support within the period indicated in sub-regulation (2),

or has agreed before the end of that period to that support, financial

support may be provided in accordance with the terms submitted to

the Authority.

(6) The decision of the board of directors of the institution to

provide financial support shall, where the Authority is responsible

for such an institution, be transmitted to

(a) the Authority;

(b) where different from authorities in paragraphs (a) and

(c), and where applicable, the consolidating

supervisor;

(c) where different from paragraphs (a) and (b), the

European regulatory authority of the group entity

receiving the financial support; and

(d) the EBA

Provided that where the Authority is the consolidating

supervisor, it shall immediately inform the other members of the

supervisory college and the members of the resolution college.

(7) If the Authority, as the Authority responsible for the group

entity providing financial support, restricts or prohibits group

financing support pursuant to sub-regulation (2) and where the

group recovery plan in accordance with regulation 7(5) makes

reference to intra-group financial support, the Authority in its

capacity as the Authority of the group entity in relation to whom

the support is restricted or prohibited may request the consolidating

supervisor to initiate a reassessment of the group recovery plan

pursuant to regulation 8 or, where a recovery plan is drawn up on

an individual basis, request the group entity to submit a revised

recovery plan.

Group entities shall make public whether or not they have

entered into a group financial support agreement pursuant to

regulation 19 and make public a description of the general terms of

any such agreement and the names of the group entities that are

party to it and update that information at least annually. Articles

431 to 434 of the CRR shall apply.

(1) Where an institution infringes or, due inter alia to a

rapidly deteriorating financial condition, including deteriorating

liquidity situation, increasing level of leverage, non-performing

loans or concentration of exposures, as assessed on the basis of a

set of triggers, which may include the institution’s own funds

requirement plus 1.5 percentage points, is likely in the near future

to infringe the requirements of the CRR, the CRD, Title II of

Directive 2014/65/EU or any of Articles 3 to 7, 14 to 17, and 24, 25

and 26 of Regulation (EU) No 600/2014 of the European

parliament and of the Council of 15 May 2014 on markets in

financial instruments and amending Regulation (EU) No 648/2012,

the Authority shall have at its disposal, without prejudice to the

measures referred to in regulation 9 of the Banking Act

(Supervisory Review) Regulations and regulation 16 of the

Investment Services Act (Supervisory Review) Regulations where

applicable, at least the following measures

(a) require the board of directors of the institution to

implement one or more of the arrangements or

measures set out in the recovery plan or in accordance

with regulation 5(2) to update such a recovery plan

when the circumstances that led to the early

intervention are different from the assumptions set out

in the initial recovery plan and implement one or more

of the arrangements or measures set out in the updated

plan within a specific timeframe and in order to ensure

that the conditions referred to in the introductory

phrase no longer apply;

(b) require the board of directors of the institution to

examine the situation, identify measures to overcome

any problems identified and draw up an action

programme to overcome those problems and a

timetable for its implementation;

(c) require the board of directors of the institution to

convene, or if the board of directors fails to comply

with that requirement convene directly, a meeting of

shareholders of the institution, and in both cases set

the agenda and require certain decisions to be

considered for adoption by the shareholders;

(d) require one or more directors or members of the senior

management to be removed or replaced if those

persons are found unfit to perform their duties

pursuant to Article 13 of the CRD or Article 9 of

Directive 2014/65/EU;

(e) require the board of directors of the institution to draw

up a plan for negotiation on restructuring of debt with

some or all of its creditors according to the recovery

plan, where applicable;

(f)

require changes to the institution's business strategy;

(g) require changes to the legal or operational structures

of the institution; and

(h) acquire, including through on-site inspections and

provide to the Resolution Committee, all the

information necessary in order to update the resolution

plan and prepare for the possible resolution of the

institution and for valuation of the assets and liabilities

of the institution in accordance with regulation 36.

(2) The Authority shall notify the Resolution Committee

without delay upon determining that the conditions laid down in

sub-regulation (1) have been met in relation to an institution. The

R e s o l u t i o n C o m m i t t e e s h a l l h av e t h e p o w e r t o r e q u i r e t h e

institution to contact potential purchasers in order to prepare for the

resolution of the institution, subject to the conditions laid down in

regulation 39(2) and the confidentiality provisions laid down in

regulation 84.

(3) For each of the measures referred to in sub-regulation (1),

the Authority shall set an appropriate deadline for completion, so as

to enable the Authority to evaluate the effectiveness of the

measure.

Where there is a significant deterioration in the financial

situation of an institution or where there are serious infringements

of law, of regulations or of the statutes of the institution, or serious

administrative irregularities, and other measures taken in

accordance with regulation 27 are not sufficient to reverse that

deterioration, the Authority may require the removal of the senior

management or the board of directors of the institution, in its

entirety or with regard to individuals. The appointment of the new

senior management or the board of directors shall be done in

accordance with Maltese and European Union law and be subject to

the approval or consent of the Authority.

(1) Where replacement of the senior management or board

of directors as referred to in regulation 28 is deemed to be

insufficient by the Authority to remedy the situation, the Authority

may appoint one or more temporary administrators to the

institution. The Authority may, based on what is proportionate in

the circumstances, appoint any temporary administrator either to

replace the board of directors of the institution temporarily or to

work temporarily with the board of directors of the institution and

the Authority shall specify its decision at the time of appointment.

If the Authority appoints a temporary administrator to work with

the board of directors of the institution, the Authority shall further

specify, at the time of such appointment the role, duties and powers

of the temporary administrator and any requirements for the board

of directors of the institution to consult or to obtain the consent of

the temporary administrator prior to taking specific decisions or

actions. The Authority shall be required to make public the

appointment of any temporary administrator except where the

temporary administrator does not have the power to represent the

institution. The Authority shall further ensure that any temporary

administrator has the qualifications; ability and knowledge required

to carry out his or her functions and is free of any conflict of

interests.

(2) The Authority shall specify the powers of the temporary

administrator at the time of the appointment of the temporary

administrator based on what is proportionate in the circumstances.

Such powers may include some or all of the powers of the board of

directors of the institution under the statutes of the institution and

under Maltese law, including the power to exercise some or all of

the administrative functions of the board of directors of the

institution. The powers of the temporary administrator in relation to

the institution shall comply with the Companies Act.

(3) The role and functions of the temporary administrator shall

be specified by the Authority at the time of appointment and may

include ascertaining the financial position of the institution,

managing the business or part of the business of the institution with

a view to preserving or restoring the financial position of the

institution and taking measures to restore the sound and prudent

management of the business of the institution. The Authority shall

specify any limits on the role and functions of the temporary

administrator at the time of appointment.

(4) The Authority shall have the exclusive power to appoint

and remove any temporary administrator; may remove a temporary

administrator at any time and for any reason; and may vary the

terms of appointment of a temporary administrator at any time

subject to this regulation.

(5) The Authority may require that certain acts of a temporary

administrator be subject to the prior consent of the Authority. The

Authority shall specify any such requirements at the time of

appointment of a temporary administrator or at the time of any

variation of the terms of appointment of a temporary administrator.

In any case, the temporary administrator may exercise the power to

convene a general meeting of the shareholders of the institution and

to set the agenda of such a meeting only with the prior consent of

the Authority.

(6) The Authority may require that a temporary administrator

draws up reports on the financial position of the institution and on

the acts performed in the course of its appointment, at intervals set

by the Authority and at the end of his or her mandate.

(7) The appointment of a temporary administrator shall not last

more than one year. That period may be exceptionally renewed if

the conditions for appointing the temporary administrator continue

to be met. The Authority shall be responsible for determining

whether conditions are appropriate to maintain a temporary

administrator and justifying any such decision to shareholders.

(8) Subject to this regulation, the appointment of a temporary

administrator shall not prejudice the rights of the shareholders in

accordance with European Union or Maltese company law.

(9) The liability of the temporary administrator may be limited

for acts and omissions in the discharge of his or her duties as

temporary administrator in accordance with sub-regulation (3).

(10) A temporary administrator appointed pursuant to this

regulation shall not be deemed to be a shadow director or a de facto

director under Maltese law.

(1) Where the conditions for the imposition of

requirements under regulation 27 or the appointment of a

temporary administrator in accordance with regulation 29 are met

in relation to a Union parent undertaking, where the Authority is

the consolidating supervisor, it shall notify the EBA and consult the

European regulatory authorities within the supervisory college.

(2) Following the notification and consultation, where the

Authority is the consolidating supervisor, it shall decide whether to

apply any of the measures in regulation 27 or appoint a temporary

administrator under regulation 29 in respect of the relevant Union

parent undertaking, taking into account the impact of those

measures on the group entities in other Member States. The

Authority, where it is the consolidating supervisor shall notify the

d e c i s io n t o t h e E u r o p e a n r e g u la t o r y a u t h o r i t i e s w i t h i n t he

supervisory college and the EBA.

(3) Where the Authority is responsible for the supervision on

an individual basis of a subsidiary of a Union parent undertaking

and the conditions for the imposition of requirements under

regulation 27 or the appointment of a temporary administrator

under regulation 29 are met in relation to such a subsidiary, the

Authority, where it intends to take a measure in accordance with

those regulations, shall notify the EBA and consult the European

regulatory authority acting as the consolidating supervisor.

(4) Following the notification and consultation referred to in

sub-regulation (3), the Authority, as the Authority responsible for

the supervision on an individual basis of the subsidiary of the

Union parent undertaking, shall decide whether to apply any of the

measures in regulation 27 or appoint a temporary administrator

under regulation 29. The decision shall give due consideration to

any assessment of the European regulatory authority acting as the

consolidating supervisor. The Authority, shall notify the decision to

the European regulatory authority acting as the consolidating

supervisor and other European regulatory authorities within the

supervisory college and the EBA.

(5) Where the Authority is the consolidating supervisor, on

receiving a notification from the European regulatory authority

resp onsib le f or the su perv ision on an in div idual basis o f a

subsidiary of a Union parent undertaking in accordance with

Article 30(3) of the BRRD, the Authority may assess the likely

impact of the imposition of requirements under regulation 27 or the

appointment of a temporary administrator in accordance with

regulation 29 to the institution in question, on the group or on

group entities in other Member States and shall communicate that

assessment to the European regulatory authority concerned within

three days.

(6) Where the Authority and one or more European regulatory

authorities intend to appoint a temporary administrator or apply any

of the measures in regulation 27 to more than one institution in the

same group, the Authority together with the other relevant

European regulatory authorities shall consider whether it is more

appropriate to appoint the same temporary administrator for all the

entities concerned or to coordinate the application of any measures

in regulation 27 to more than one institution in order to facilitate

so lutio ns restori ng t he fin an cial posit ion o f th e instit ution

concerned. The assessment shall take the form of a joint decision

(a) where the Authority is the consolidating supervisor, of

the Authority and the relevant European regulatory

authorities; or

(b) where the Authority is responsible for supervision on

an individual basis of a subsidiary of a Union parent

undertaking,

of the Authority, the European regulatory authority acting as the

consolidating supervisor and the other relevant European

regulatory authorities responsible for supervision on an individual

basis of other subsidiaries of the Union parent undertaking. The

joint decision shall be reached within five days from the date of the

notification referred to in Article 30(1) of the BRRD. The joint

decision shall be reasoned and set out in a document, which shall

be provided by the Authority, where it is the consolidating

supervisor to the Union parent undertaking

Provided that, the Authority may request the EBA to assist

the authorities mentioned in this sub-regulation in reaching an

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

1093/2010.

(7) In the absence of a joint decision within five days, where

the Authority is either the consolidating supervisor or the Authority

responsible for supervision on an individual basis of a subsidiary, it

may take an individual decision on the appointment of a temporary

administrator to the institution for which it has responsibility and

on the application of any of the measures in regulation 27.

(8) Where the Authority does not agree with a decision notified

by the European regulatory authority acting as the consolidating

supervisor in accordance with Article 30(1) of the BRRD, a

decision notified by an European regulatory authority responsible

for supervision on an individual basis of a subsidiary of a Union

parent undertaking in accordance with Article 30(3), or in the

absence of a joint decision under sub-regulation (6) and (7), the

Authority may refer the matter to the EBA in accordance with sub-

regulation (9).

(9) The Authority may request the EBA to assist the authorities

mentioned in this regulation that intend to apply one or more of the

measures in paragraph (a) of Article 27(1) of the BRRD with

respect to the paragraphs (4), (10), (11) and (19) of Section A of the

Annex to the BRRD, in paragraph (e) of Article 27(1) of the BRRD

or in paragraph (g) of Article 27(1) of the BRRD in reaching an

agreement in accordance with Article 19(3) of Regulation (EU) No

1093/2010.

(10) The decision of the Authority shall be reasoned. The

decision shall take into account the views and reservations of the

European regulatory authorities concerned expressed during the

consultation period referred to in Article 30(1) or (3) of the BRRD

or the five-day period referred to in sub-regulations (6) and (7) as

well as the potential impact of the decision on financial stability in

Malta and in the Member States concerned. The Authority shall

provide its decisions: where the Authority is the consolidating

s u per vi s or, to t he Un io n pa r e n t und e r tak in g; o r, w he r e t he

Authority is responsible f or a subsidiary, to the subsidiary

concerned.

(11) In the cases referred to in Article 30(6) of the BRRD,

where, before the end of the consultation period referred to in

Article 30(1) and (3) of the BRRD or at the end of the five-day

period referred to in sub-regulations (6) and (7), any of the

authorities mentioned in this regulation has referred the matter to

the EBA in accordance with Article 19(3) of Regulation (EU) No

1093/2010, the Authority and the European regulatory authorities

concerned shall defer their decisions and await any decision that

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

Regulation, and shall take their decision in accordance with the

decision of the EBA. The five-day period shall be deemed to be the

conciliation period within the meaning of that Regulation. The

matter shall not be referred to the EBA after the end of the five-day

period or after a joint decision has been reached.

(12) The Authority may, in the cases referred to in sub-

regulation (9), before the end of the consultation period referred to

in Article 30(1) and (3) of the BRRD or at the end of the five-day

period referred to in sub-regulation (7), refer the matter to the EBA

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

The five-day period shall be deemed to be the conciliation period

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

referred to the EBA after the end of the five-day period or after a

joint decision has been reached.

(13) In the absence of a decision by the EBA within three days,

individual decisions taken in accordance with Article 30(1) or (3)

of the BRRD, or sub-regulation (7), shall apply.

(1) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall have regard to

the resolution objectives, and choose the tools and powers that best

achieve the objectives that are relevant in the circumstances of the

case.

(2)

The resolution objectives referred to in sub-regulation (1)

are

(a) to ensure the continuity of critical functions;

(b) to avoid a significant adverse effect on the financial

system, in particular by preventing contagion,

including to market infrastructures, and by

maintaining market discipline;

(c) to protect public funds by minimising reliance on

extraordinary public financial support;

(d) to protect depositors covered by Directive 2014/49/EU

and investors covered by Directive 97/9/EC;

(e) to protect client funds and client assets

Provided that, when pursuing the above objectives, the

Resolution Committee shall seek to minimise the cost of resolution

and avoid destruction of value unless necessary to achieve the

resolution objectives.

(3) Subject to different provisions of these regulations, the

resolution objectives are of equal significance, and the Resolution

Committee shall balance them as appropriate to the nature and

circumstances of each case.

(1) The Resolution Committee shall take a resolution

action in relation to an institution referred to in paragraph (a) of the

definition "entity" in regulation 2(1) only if the Resolution

Committee considers that all of the following conditions are met

(a) the determination that the institution is failing or is

likely to fail has been made by the Authority, after

consulting the Resolution Committee; or, subject to

the conditions laid down in sub-regulation (2), by the

Resolution Committee after consulting the Authority;

(b) having regard to timing and other relevant

circumstances, there is no reasonable prospect that any

alternative private sector measures, including

measures by an IPS, or supervisory action, including

early intervention measures or the write-down or

conversion of relevant capital instruments and eligible

liabilities in accordance with regulation 59(2) taken in

respect of the institution, would prevent the failure of

the institution within a reasonable time-frame;

(c) a resolution action is necessary in the public interest

pursuant to sub-regulation (5)

Provided that, for the purposes of paragraph (c), a

resolution action shall be treated as in the public interest if it is

necessary for the achievement of and is proportionate to one or

more of the resolution objectives referred to in regulation 31 and

winding up of the institution under normal insolvency proceedings

would not meet those resolution objectives to the same extent.

(2) In addition to the Authority, the determination that the

institution is failing or likely to fail under sub-regulation (1)(a) can

be made by the Resolution Committee, after consulting the

Authority. The Authority shall provide the Resolution Committee

with any relevant information that the latter requests in order to

perform its assessment without delay.

(3) The previous adoption of an early intervention measure

according to regulation 27 is not a condition for taking a resolution

action.

(4) For the purposes of sub-regulation (1)(a), an institution

shall be deemed to be failing or likely to fail in one or more of the

following circumstances

(a) the institution infringes or there are objective elements

to support a determination that the institution will, in

the near future, infringe the requirements for

continuing authorisation in a way that would justify

the withdrawal of the licence by the Authority

including but not limited to because the institution has

incurred or is likely to incur losses that will deplete all

or a significant amount of its own funds;

(b) the assets of the institution are or there are objective

elements to support a determination that the assets of

the institution will, in the near future, be less than its

liabilities;

(c) the institution is or there are objective elements to

support a determination that the institution will, in the

near future, be unable to pay its debts or other

liabilities as they fall due;

(d) extraordinary public financial support is required

except when, in order to remedy a serious disturbance

in the economy of Malta or of another Member State

and preserve financial stability, the extraordinary

public financial support takes any of the following

forms

(i)

a State guarantee to back liquidity facilities

provided by central banks according to the

central banks’ conditions;

(ii) a State guarantee of newly issued liabilities; or

(iii) an injection of own funds or purchase of capital

instruments at prices and on terms that do not

confer an advantage upon the institution, where

neither the circumstances referred to in

paragraphs (a), (b) or (c) of this sub-regulation

nor the circumstances referred to in regulation

59(3) are present at the time the public support is

granted

Provided that in each of the cases mentioned in paragraph

(d)(i), (ii) and (iii), the guarantee or equivalent measures referred to

therein shall be confined to solvent institutions and shall be

conditional on final approval under the Union State aid framework.

Those measures shall be of a precautionary and temporary nature

and shall be proportionate to remedy the consequences of the

serious disturbance and shall not be used to offset losses that the

institution has incurred or is likely to incur in the near future

Provided further that support measures under paragraph

(d)(iii) shall be limited to injections necessary to address capital

shortfall established in the Maltese, European Union or SSM-wide

stress tests, asset quality reviews or equivalent exercises conducted

by the European Central Bank, the EBA or national authorities,

where applicable, confirmed by the Authority.

(5) For the purposes of sub-regulation (4), State aid rules may

apply in the case of impaired asset measures and recapitalisation,

where it is precautionary. A credit institution, prior to resorting to

State aid shall undertake all possible capital raising measures by

private means. If these are not sufficient, shareholders, hybrid

capital and subordinated debt holders shall contribute to reduce the

capital shortfall to the maximum extent before State aid can be

granted. Such a contribution can take the form of either a

conversion into Common Equity Tier 1 or a write-down of the

principal on the instrument, depending on the capital position of the

credit institution. Prior to the granting of State aid, at least one of

the following scenarios should occur

(a) where the capital ratio of the credit institution remains

above the European regulatory minimum but below the

threshold set by the Authority or the Resolution

Committee; or

(b) where the credit institution no longer meets the

minimum regulatory capital requirements

Provided that no contribution from senior debt holders, in

particular from insured deposits; uninsured deposits; bonds and all

other senior debt, will be required

Provided further that this shall not affect the application of

the "no creditor worse off" principle to be carried out under

regulation 74.

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 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.

(1) The Resolution Committee may take a resolution

action in relation to a financial institution as defined in paragraph

(b) of the definition "entity" when the conditions laid down in

reg ulat ion 3 2(1 ), a re m e t wi th re g a rd to b oth th e f in a ncial

institution and with regard to the parent undertaking subject to

consolidated supervision.

(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 above.

(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.

(1) Notwithstanding the provision of any other law, the

provisions of Directive 2011/35/EU shall not apply to company or

companies in relation to which a resolution action may be taken in

accordance with regulations 32 and 33.

(2) Notwithstanding the provision of any other law, Article 10,

Article 19(1), Article 29(1), (2) and (3), the first sub-paragraph of

Article 31(2), Articles 33 to 36 and Articles 40, 41 and 42 of Directive

2012/30/EU shall not apply in the case of use of a resolution action

which may be taken in accordance with regulations 32 and 33.

(1) The Resolution Committee shall, after 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, such powers shall be exercised in

accordance with the scope, duration and conditions provided for in the

relevant Maltese legislation.

Provided further that, the conditions provided for in this

regulation shall be without prejudice to the conditions related to such

power of suspension payment or delivery obligations..

(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.

(1) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall take all

appropriate measures to ensure that the resolution action is taken in

accordance with the following principles

(a) the shareholders of the institution under resolution

bear first losses;

(b) creditors of the institution under resolution bear losses

after the shareholders in accordance with the order of

priority of their claims under normal insolvency

proceedings, save as expressly provided otherwise in

these regulations;

(c) the board of directors and senior management of the

institution under resolution are replaced, except in

those cases when the retention of the board of directors

and senior management, in whole or in part, as

appropriate to the circumstances, is considered to be

necessary for the achievement of the resolution

objectives;

(d) the board of directors and senior management of the

institution under resolution shall provide all necessary

assistance for the achievement of the resolution

objectives;

(e) natural and legal persons are made liable, under civil

or criminal law for their responsibility for the failure

of the institution;

(f)

except where otherwise provided in these regulations,

creditors of the same class are treated in an equitable

manner;

(g) no creditor shall incur greater losses than would have

been incurred if the institution or entity referred to in

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

regulation 2(1) had been wound up under normal

insolvency proceedings in accordance with the

safeguards in regulations 73 to 75;

(h) covered deposits are fully protected; and

(i)

resolution action is taken in accordance with the

safeguards in these regulations.

(2) Where an institution is a group entity, the Resolution

Committee shall, without prejudice to regulation 31, apply

resolution tools and exercise resolution powers in a way that

minimises the impact on other group entities and on the group as a

whole and minimises the adverse effects on financial stability in

the European Union, in Malta and in the other Member States, in

particular, in the countries where the group operates.

(3) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall ensure that it

complies with the Union State aid framework, where applicable.

(4) Where the sale of business tool, the bridge institution tool

or the asset separation tool is applied to an institution or an entity

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

regulation 2(1), that institution or entity shall be considered to be

the subject of bankruptcy proceedings or analogous insolvency

proceedings for the purposes of Article 5(1) of Council Directive

2001/23/EC of 12 March 2001 on the approximation of the laws of

the Member States relating to the safeguarding of employees’

rights in the event of transfers of undertakings, businesses or parts

of undertakings or businesses.

(5) When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall inform and

consult employee representatives where appropriate.

(6) The Resolution Committee shall apply resolution tools and

exercise resolution powers without prejudice to provisions on the

representation of employees in the board of directors as provided

for in Maltese law or practice.

(1) The Resolution Committee may appoint a special

manager to replace the board of directors of the institution under

resolution. The Resolution Committee shall make public the

appointment of a special manager. The special manager shall have

the qualifications, ability and knowledge required to carry out his

or her functions.

(2) The special manager shall have all the powers of the

shareholders and the board of directors of the institution. However,

the special manager may only exercise such powers under the

control of the Resolution Committee.

(3) The special manager shall have the statutory duty to take all

the measures necessary to promote the resolution objectives

referred to in regulation 31 and implement resolution actions

according to the decision of the Resolution Committee. Where

necessary, that duty shall override any other duty of management in

accordance with the statutes of the institution or Maltese law,

insofar as they are inconsistent. Those measures may include an

increase of capital, reorganisation of the ownership structure of the

institution or takeovers by institutions that are financially and

organisationally sound in accordance with the resolution tools

referred to in regulations 37 to 58.

(4) The Resolution Committee may set limits to the action of a

special manager or require that certain acts of the special manager

be subject to the Resolution Committee’s prior consent. The

Resolution Committee may remove the special manager at any

time.

(5) The special manager shall draw up reports for the

Resolution Committee on the economic and financial situation of

the institution and on the acts performed in the conduct of his or her

duties, at regular intervals set by the Resolution Committee and at

the beginning and the end of his or her mandate.

(6) A special manager shall not be appointed for more than one

year. That period may be renewed, on an exceptional basis, if the

Resolution Committee determines that the conditions for

appointment of a special manager continue to be met.

(7) Where the Resolution Committee intends to appoint a

special manager in relation to an entity affiliated to a group and one

or more European resolution authorities intend to appoint a special

manager in relation to another entity affiliated to the same group,

the Resolution Committee shall, together with the European

resolution authorities concerned, consider whether it is more

appropriate to appoint the same special manager for all the entities

concerned in order to facilitate solutions redressing the financial

soundness of the entities concerned.

(8) In the event of insolvency, where Maltese law provides for

the appointment of insolvency management, such management may

constitute special management as referred to in this regulation.

(1) Before taking resolution action or exercising the

power to write down or convert relevant capital instruments,and

eligible liabilities in accordance with regulation 59, the Resolution

Committee shall ensure that a fair, prudent and realistic valuation

of the assets and liabilities of the institution or entity referred to in

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

2(1) is carried out by a person independent from any public

authority, including the Resolution Committee, and the institution

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

"entity" in regulation 2(1). Subject to sub-regulation (13) and to

regulation 85, where all the requirements laid down in this

regulat ion are met, th e valuati on shall be considered to be

definitive.

(2) Where an independent valuation according to sub-

regulation (1) is not possible, the Resolution Committee may carry

out a provisional valuation of the assets and liabilities of the

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

definition "entity" in regulation 2(1), in accordance with sub-

regulation (9).

(3) The objective of the valuation shall be to assess the value of

the assets and liabilities of the institution or entity referred to in

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

2(1) that meets the conditions for resolution of regulations 32 and

33. (4)

The purposes of the valuation shall be

(a) to inform the determination of whether the conditions

for resolution or the conditions for the write-down or

conversion of capital instruments and eligible liabilities

in accordance with regulation 59 are met;

(b) if the conditions for resolution are met, to inform the

decision on the appropriate resolution action to be

taken in respect of the institution or entity referred to

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

regulation 2(1);

(c) when the power to write down or convert relevant capital

instruments 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) when the bail-in tool is applied, to inform the decision

on the extent of the write-down or conversion of bail-

inable liabilities;

(e) when the bridge institution tool or asset separation tool

is applied, to inform the decision on the assets, rights,

liabilities or shares or other instruments of ownership

to be transferred and the decision on the value of any

consideration to be paid to the institution under

resolution or, as the case may be, to the owners of the

shares or other instruments of ownership;

(f)

when the sale of business tool is applied, to inform the

decision on the assets, rights, liabilities or shares or

other instruments of ownership to be transferred and to

inform the Resolution Committee’s understanding of

what constitutes commercial terms for the purposes of

regulation 38;

(g) in all cases, to ensure that any losses on the assets of

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

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

are fully recognised at the moment the resolution tools

are applied or the power to write down or convert

relevant capital instruments is exercised and eligible

liabilities in accordance with regulation 59.

(5) Without prejudice to the Union State aid framework, where

applicable, the valuation shall be based on prudent assumptions,

including as to rates of default and severity of losses. The valuation

shall not assume any potential future provision of extraordinary

public financial support or central bank emergency liquidity

assistance or any central bank liquidity assistance provided under

non-standard collateralisation, tenor and interest rate terms to the

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

definition "entity" in regulation 2(1) from the point at which

resolution action is taken or the power to write down or convert

relevant capital instruments and eligible liabilities in accordance with

regulation 59 is exercised. Furthermore, the valuation shall take

account of the fact that, if any resolution tool is applied

(a) the Resolution Committee and any financing

arrangement acting pursuant to regulation 101 may

recover any reasonable expenses properly incurred

from the institution under resolution, in accordance

with regulation 37(7);

(b) the resolution financing arrangement may charge

interest or fees in respect of any loans or guarantees

provided to the institution under resolution, in

accordance with regulation 101.

(6) The valuation shall be supplemented by the following

information as appearing in the accounting books and records of

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

the definition "entity" in regulation 2(1)

(a) an updated balance sheet and a report on the financial

position of the institution or entity referred to in

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

regulation 2(1);

(b) an analysis and an estimate of the accounting value of

the assets;

(c) the list of outstanding on balance sheet and off-balance

sheet liabilities shown in the books and records of the

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

(d) of the definition "entity" in regulation 2(1), with an

indication of the respective credits and priority levels

under the applicable insolvency law.

(7) Where appropriate, to inform the decisions referred to in

sub-regulation (4)(e) and (f), the information in sub-regulation

(6)(b) may be complemented by an analysis and estimate of the

value of the assets and liabilities of the institution or entity referred

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

regulation 2(1) on a market value basis.

(8) The valuation shall indicate the subdivision of the creditors

in classes in accordance with their priority levels under the

applicable insolvency law and an estimate of the treatment that

each class of shareholders and creditors would have been expected

to receive, if the institution or entity referred to in paragraphs (b),

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

up under normal insolvency proceedings

Provided that, that estimate shall not affect the application

of the "no creditor worse off" principle to be carried out under

regulation 74.

(9) Where due to the urgency in the circumstances of the case it

is not possible to comply with the requirements in sub-regulations

(6) and (8) or sub-regulation (2) applies, a provisional valuation

shall be carried out. The provisional valuation shall comply with

the requirements in sub-regulation (3) and in so far as reasonably

practicable in the circumstances with the requirements of sub-

regulations (1), (6) and (8). The provisional valuation referred to in

this sub-regulation shall include a buffer for additional losses, with

appropriate justification.

(10) A valuation that does not comply with all the requirements

laid down in this regulation shall be considered to be provisional

until an independent person has carried out a valuation that is fully

compliant with all the requirements laid down in this regulation.

That ex-post definitive valuation shall be carried out as soon as

practicable. It may be carried out either separately from the

valuation referred to in regulation 74, or simultaneously with and

by the same independent person as that valuation, but shall be

distinct from it. The purposes of the ex-post definitive valuation

shall be

(a) to ensure that any losses on the assets of the institution

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

definition "entity" in regulation 2(1) are fully

recognised in the books of accounts of the institution

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

definition "entity" in regulation 2(1);

(b) to inform a decision to write back creditors’ claims or

to increase the value of the consideration paid, in

accordance with sub-regulation (11).

(11) In the event that the ex-post definitive valuation’s estimate

of the net asset value of the institution or entity referred to in

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

2(1) is higher than the provisional valuation’s estimate of the net

asset value of the institution or entity referred to in paragraphs (b),

( c ) o r ( d ) o f t h e d e f i n i t i on " e n t i t y" i n r e g u l a t i o n 2 ( 1 ) , t h e

Resolution Committee may

(a) exercise its power to increase the value of the claims

of creditors or owners of relevant capital instruments

which have been written down under the bail-in tool;

(b) instruct a bridge institution or asset management

vehicle to make a further payment of consideration in

respect of the assets, rights, liabilities to the institution

under resolution, or as the case may be, in respect of

the shares or instruments of ownership to the owners

of the shares or other instruments of ownership.

(12) Notwithstanding sub-regulation (1), a provisional valuation

conducted in accordance with sub-regulations (9) and (10) shall be

a valid basis for the Resolution Committee to take resolution

actions, including taking control of a failing institution or entity

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

regulation 2(1), or to exercise the write-down or conversion power

of capital instruments and eligible liabilities in accordance with

regulation 59.

(13) The valuation shall be an integral part of the decision to

apply a resolution tool or exercise a resolution power, or the

decision to exercise the write-down or conversion power of capital

instruments and eligible liabilities in accordance with regulation 59.

The valuation itself shall not be subject to a separate right of appeal

but may be subject to an appeal together with the decision in

accordance with regulation 85.

(1) The Resolution Committee shall have the necessary

powers to apply the resolution tools to institutions and to entities

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

regulation 2(1) that meet the applicable conditions for resolution.

(2) Where the Resolution Committee decides to apply a

resolution tool to an institution or entity referred to in paragraphs

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

resolution action would result in losses being borne by creditors or

their claims being converted, the Resolution Committee shall

exercise the power to write down and convert capital instruments

and eligible liabilities in accordance with regulation 59 immediately

before or together with the application of the resolution tool.

(3) The resolution tools referred to in sub-regulation (1) are the

following

(a) the sale of business tool;

(b) the bridge institution tool;

(c) the asset separation tool;

(d) the bail-in tool.

(4) Subject to sub-regulation (5), the Resolution Committee

may apply the resolution tools individually or in any combination.

(5) The Resolution Committee may apply the asset separation

tool only together with another resolution tool.

(6) Where only the resolution tools referred to in sub-

regulation (3)(a) or (b) are used, and they are used to transfer only

part of the assets, rights or liabilities of the institution under

resolution, the residual institution or entity referred to in

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

2(1) from which the assets, rights or liabilities have been

transferred, shall be wound up under normal insolvency

proceedings. Such winding up shall be done within a reasonable

time-frame, having regard to any need for that institution or entity

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

r e g u l a t i o n 2 ( 1 ) t o p r o v i d e se r v i c e s o r s u p p o r t p u r s u a n t t o

regulation 65 in order to enable the recipient to carry out the

activities or services acquired by virtue of that transfer, and any

other reason that the continuation of the residual institution or

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

"entity" in regulation 2(1) is necessary to achieve the resolution

objectives or comply with the principles referred to in regulation

34. (7) The Resolution Committee and any financing arrangement

acting pursuant to regulation 101 may recover any reasonable

expenses properly incurred in connection with the use of the

resolution tools or powers or government financial stabilisation

tools in one or more of the following ways

(a) as a deduction from any consideration paid by a

recipient to the institution under resolution or, as the

case may be, to the owners of the shares or other

instruments of ownership;

(b) from the institution under resolution, as a preferred

creditor; or

(c) from any proceeds generated as a result of the

termination of the operation of the bridge institution or

the asset management vehicle, as a preferred creditor.

(8) Any provisions under normal insolvency proceedings

relating to the voidability or unenforceability of legal acts

detrimental to creditors shall not apply to transfers of assets, rights

or liabilities from an institution under resolution to another entity

by virtue of the application of a resolution tool or exercise of a

resolution power, or use of a government financial stabilisation

tool.

(9) The Resolution Committee may make use of additional

tools and powers exercisable where an institution or entity referred

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

regulation 2(1) meets the conditions for resolution, provided that

(a) when applied to a cross-border group, those additional

powers do not pose obstacles to effective group

resolution; and

(b) they are consistent with the resolution objectives and

the general principles governing resolution referred to

in regulations 31 and 34.

(10) In the very extraordinary situation of a systemic crisis, the

Resolution Committee may seek funding from alternative financing

sources through the use of government stabilisation tools provided

for in regulations 56 to 58 when the following conditions are met

(a) a contribution to loss absorption and recapitalisation

equal to an amount not less than 8% of total liabilities

including own funds of the institution under

resolution, measured at the time of resolution action in

accordance with the valuation provided for in

regulation 36, has been made by the shareholders and

the holders of other instruments of ownership, the

holders of relevant capital instruments and other

eligible liabilities and other bail-inable liabilities;

through write-down, conversion or otherwise;

(b) it shall be conditional on prior and final approval

under the Union State aid framework.

(1) The Resolution Committee shall have the power to

transfer to a purchaser that is not a bridge institution

(a) shares or other instruments of ownership issued by an

institution under resolution;

(b) all or any assets, rights or liabilities of an institution

under resolution

Provided that, subject to sub-regulations (8) and (9) and to

regulation 85, the transfer referred to in this sub-regulation shall

take place without obtaining the consent of the shareholders of the

institution under resolution or any third party other than the

p u r c h a s e r, a n d w i t h o u t c o m p l y i n g w i t h a n y p r o c e d u r a l

requirements under company or securities law other than those

included in regulation 39, and it shall not constitute a default or

termination event in relation to any obligation relating to such

assets or liabilities or under any contract to which the failed

institution is a party.

(2) A transfer made pursuant to sub-regulation (1) shall be

made on commercial terms, having regard to the circumstances,

and in accordance with the Union State aid framework.

(3) In accordance with sub-regulation (2), the Resolution

Committee shall take all reasonable steps to obtain commercial

terms for the transfer that conform with the valuation conducted

under regulation 36, having regard to the circumstances of the case.

(4) Subject to regulation 37(7), any consideration paid by the

purchaser shall benefit

(a) the owners of the shares or other instruments of

ownership, where the sale of business has been

effected by transferring shares or instruments of

ownership issued by the institution under resolution

from the holders of those shares or instruments to the

purchaser;

(b) the institution under resolution, where the sale of

business has been effected by transferring some or all

of the assets or liabilities of the institution under

resolution to the purchaser.

(5) When applying the sale of business tool the Resolution

Committee may exercise the transfer power more than once in

order to make supplemental transfers of shares or other instruments

of ownership issued by an institution under resolution or, as the

case may be, assets, rights or liabilities of the institution under

resolution.

(6) Following an application of the sale of business tool, the

Resolution Committee may, with the consent of the purchaser,

exercise the transfer powers in respect of assets, rights or liabilities

transferred to the purchaser in order to transfer the assets, rights or

liabilities back to the institution under resolution, or the shares or

other instruments of ownership back to their original owners, and

the institution under resolution or original owners shall be obliged

to take back any such assets, rights or liabilities, or shares or other

instruments of ownership.

(7) A purchaser shall have the appropriate authorisation to

carry out the business it acquires when the transfer is made

pursuant to sub-regulation (1). The Authority shall ensure that an

application for a licence shall be considered, in conjunction with

the transfer, in a timely manner.

(8) By way of derogation from Articles 22 to 25 of the CRD,

from the requirement to inform the Authority in Article 26 of the

CRD, articles 10, 10A and 10B of the Investment Services Act and

the Investment Services Rules for Investment Services Providers,

where a transfer of shares or other instruments of ownership by

virtue of an application of the sale of business tool would result in

the acquisition of or increase in a qualifying holding in an

institution of a kind referred to in Article 22(1) of the CRD or

article 10 of the Investment Services Act, the Authority shall carry

out the assessment required under those Articles in a timely manner

that does not delay the application of the sale of business tool and

prevent the resolution action from achieving the relevant resolution

objectives.

(9) Where the Authority has not completed the assessment

referred to in sub-regulation (8) from the date of transfer of shares

or other instruments of ownership in the application of the sale of

business tool by the Resolution Committee, the following

provisions shall apply

(a) such a transfer of shares or other instruments of

ownership to the acquirer shall have immediate legal

effect;

(b) during the assessment period and during any

divestment period provided by paragraph (f), the

acquirer’s voting rights attached to such shares or

other instruments of ownership shall be suspended and

vested solely in the Resolution Committee, which shall

have no obligation to exercise any such voting rights

and which shall have no liability whatsoever for

exercising or refraining from exercising any such

voting rights;

(c) during the assessment period and during any

divestment period provided by paragraph (f), the

penalties and other measures in terms of article 35B of

the Banking Act, regulations 6 and 7 of the

Administrative Penalties, Measures and Investigatory

Powers Regulations made under the Banking Act and

regulations 6 and 7 of the CRD (Administrative

Penalties, Measures and Investigatory Powers)

Regulations made under the Investment Services Act,

for infringing the requirements for acquisitions or

disposals of qualifying holdings, shall not apply to

such a transfer of shares or other instruments of

ownership;

(d) promptly upon completion of the assessment by the

Authority, the Authority shall notify the Resolution

Committee and the acquirer in writing of whether the

Authority approves or, in accordance with article

13A(11) of the Banking Act, opposes such a transfer of

shares or other instruments of ownership to the

acquirer;

(e) if the Authority approves such a transfer of shares or

other instruments of ownership to the acquirer, then

the voting rights attached to such shares or other

instruments of ownership shall be deemed to be fully

vested in the acquirer immediately upon receipt by the

Resolution Committee and the acquirer of such an

approval notice from the Authority;

(f)

if the Authority opposes such a transfer of shares or

other instruments of ownership to the acquirer, then

(i)

the voting rights attached to such shares or other

instruments of ownership as provided by

paragraph (b) shall remain in full force and

effect;

(ii) the Resolution Committee may require the

acquirer to divest such shares or other

instruments of ownership within a divestment

period determined by the Resolution Committee

having taken into account prevailing market

conditions;

(iii) if the acquirer does not complete such a

divestment within the divestment period

established by the Resolution Committee, then

the Authority, with the consent of the Resolution

Committee, may impose on the acquirer

penalties and other measures for infringing the

requirements for acquisitions or disposals of

qualifying holdings contemplated by article 35B

of the Banking Act, regulations 6 and 7 of the

Administrative

Penalties,

Measures

and

Investigatory Powers Regulations made under

the Banking Act and regulations 6 and 7 of the

CRD (Administrative Penalties, Measures and

Investigatory Powers) Regulations made under

the Investment Services Act.

(10) Transfers made by virtue of the sale of business tool shall

be subject to the safeguards referred to in regulations 73 to 80.

(11) For the purposes of exercising the rights to provide services

or to establish itself in another Member State in accordance with

the CRD or Directive 2014/65/EU, the purchaser shall be

considered to be a continuation of the institution under resolution,

and may continue to exercise any such right that was exercised by

the institution under resolution in respect of the assets, rights or

liabilities transferred.

(12) The purchaser referred to in sub-regulation (1) may

continue to exercise the rights of membership and access to

payment, clearing and settlement systems, stock exchanges,

investor compensation schemes and deposit guarantee schemes of

t he inst it uti on un der resol uti on , provi ded t hat it m eets the

membership and participation criteria for participation in such

systems

Provided that

(a) access shall not be denied on the ground that the

purchaser does not possess a rating from a credit rating

agency, or that rating is not commensurate to the rating

levels required to be granted access to the systems

referred to in this sub-regulation;

(b) where the purchaser does not meet the membership or

participation criteria for a relevant payment, clearing

or settlement system, stock exchange, investor

compensation scheme or deposit guarantee scheme,

the rights referred to in this sub-regulation shall be

exercised for such a period of time as may be specified

by the Resolution Committee, not exceeding twenty-

four months, renewable on application by the

purchaser to the Resolution Committee.

(13) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred shall not have

any rights over or in relation to the assets, rights or liabilities

transferred.

(1) Subject to sub-regulation (3), when applying the sale

of business tool to an institution or entity referred to in paragraphs

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

Resolution Committee shall market, or make arrangements for the

marketing of the assets, rights, liabilities, shares or other

instruments of ownership of that institution that the authority

intends to transfer. Pools of rights, assets, and liabilities may be

marketed separately.

(2) Without prejudice to the Union State aid framework, where

applicable, the marketing referred to in sub-regulation (1) shall be

carried out in accordance with the following criteria

(a) it shall be as transparent as possible and shall not

materially misrepresent the assets, rights, liabilities,

shares or other instruments of ownership of that

institution that the Resolution Committee intends to

transfer, having regard to the circumstances and in

particular the need to maintain financial stability;

(b) it shall not unduly favour or discriminate between

potential purchasers;

(c) it shall be free from any conflict of interest;

(d) it shall not confer any unfair advantage on a potential

purchaser;

(e) it shall take account of the need to effect a rapid

resolution action;

(f)

it shall aim at maximising, as far as possible, the sale

assets, rights or liabilities involved

Provided that, subject to paragraph (b), the principles

referred to in this sub-regulation shall not prevent the Resolution

Committee from soliciting particular potential purchasers

Provided further, that any public disclosure of the

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

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

otherwise be required in accordance with Article 17(1) of

Regulation (EU) No 596/2014 of the European Parliament and of

the Council of 16 April 2014 on market abuse (market abuse

regulation) and repealing Directive 2003/6/EC of the European

Parliament and of the Council and Commission Directives 2003/

124/EC, 2003/125/EC and 2004/72/EC Text with EEA relevance,

may be delayed in accordance with Article 17(4) or (5) of that

Regulation.

(3) The Resolution Committee may apply the sale of business

tool without complying with the requirement to market as laid

down in sub-regulation (1) when it determines that compliance with

those requirements would be likely to undermine one or more of the

resolution objectives and in particular if the following conditions

are met

(a) it considers that there is a material threat to financial

stability arising from or aggravated by the failure or

likely failure of the institution under resolution; and

(b) it considers that compliance with those requirements

would be likely to undermine the effectiveness of the

sale of business tool in addressing that threat or

achieving the resolution objective referred to in

paragraph (b) of regulation 31(2).

(1) In order to give effect to the bridge institution tool and

having regard to the need to maintain critical functions in the

bridge institution, the Resolution Committee shall have the power

to transfer to a bridge institution

(a) shares or other instruments of ownership issued by one

or more institutions under resolution;

(b) all or any assets, rights or liabilities of one or more

institutions under resolution

Provided that, subject to regulation 85, the transfer referred

to in this sub-regulation may take place without obtaining the

consent of the shareholders of the institutions under resolution or

any third party other than the bridge institution, and without

complying with any procedural requirements under company or

securities law, and it shall not constitute a default or termination

event in relation to any obligation relating to such assets or

liabilities or under any contract to which the failed institution is a

party.

(2)

The bridge institution shall be a legal person that meets all

of the following requirements

(a) it is wholly or partially owned by one or more public

authorities which may include the Resolution

Committee or the resolution financing arrangement

and is controlled by the Resolution Committee;

(b) it is created for the purpose of receiving and holding

some or all of the shares or other instruments of

ownership issued by an institution under resolution or

some or all of the assets, rights and liabilities of one or

more institutions under resolution with a view to

maintaining access to critical functions and selling the

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

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

Provided that, the application of the bail-in tool for the

purpose referred to in paragraph (b) of regulation 43(2) shall not

interfere with the ability of the Resolution Committee to control the

bridge institution.

(3) When applying the bridge institution tool, the Resolution

Committee shall ensure that the total value of liabilities transferred

to the bridge institution does not exceed the total value of the rights

and assets transferred from the institution under resolution or

provided by other sources.

(4) Subject to regulation 37(7), any consideration paid by the

bridge institution shall benefit

(a) the owners of the shares or instruments of ownership,

where the transfer to the bridge institution has been

effected by transferring shares or instruments of

ownership issued by the institution under resolution

from the holders of those shares or instruments to the

bridge institution;

(b) the institution under resolution, where the transfer to

the bridge institution has been effected by transferring

some or all of the assets or liabilities of the institution

under resolution to the bridge institution.

(5) When applying the bridge institution tool, the Resolution

Committee may exercise the transfer power more than once in

order to make supplemental transfers of shares or other instruments

of ownership issued by an institution under resolution or, as the

case may be, assets, rights or liabilities of the institution under

resolution.

(6) Following an application of the bridge institution tool, the

Resolution Committee may

(a) transfer rights, assets or liabilities back from the

bridge institution to the institution under resolution, or

the shares or other instruments of ownership back to

their original owners, and the institution under

resolution or original owners shall be obliged to take

back any such assets, rights or liabilities, or shares or

other instruments of ownership, provided that the

conditions laid down in sub-regulation (7) are met;

(b) transfer, shares or other instruments of ownership, or

assets, rights or liabilities from the bridge institution

to a third party.

(7) The Resolution Committee may transfer shares or other

instruments of ownership, or assets, rights or liabilities back from

the bridge institution in one of the following circumstances

(a) the possibility that the specific shares or other

instruments of ownership, assets, rights or liabilities

might be transferred back is stated expressly in the

instrument by which the transfer was made;

(b) the specific shares or other instruments of ownership,

assets, rights or liabilities do not in fact fall within the

classes of, or meet the conditions for transfer of shares

or other instruments of ownership, assets, rights or

liabilities specified in the instrument by which the

transfer was made

Provided that such a transfer back may be made within any

period, and shall comply with any other conditions, stated in that

instrument for the relevant purpose.

(8) Transfers between the institution under resolution, or the

original owners of shares or other instruments of ownership, on the

one hand, and the bridge institution on the other, shall be subject to

the safeguards referred to in regulations 73 to 80.

(9) For the purposes of exercising the rights to provide services

or to establish itself in another Member State in accordance with

the CRD or Directive 2014/65/EU, a bridge institution shall be

considered to be a continuation of the institution under resolution,

and may continue to exercise any such right that was exercised by

the institution under resolution in respect of the assets, rights or

liabilities transferred

Provided that, for other purposes, the Resolution

Committee may require that a bridge institution is considered to be

a continuation of the institution under resolution, and is able to

continue to exercise any right that was exercised by the institution

under resolution in respect of the assets, rights or liabilities

transferred.

(10) The bridge institution may continue to exercise the rights of

membership and access to payment, clearing and settlement

systems, stock exchanges, investor compensation schemes and

deposit guarantee schemes of the institution under resolution,

provided that it meets the membership and participation criteria for

participation in such systems

Provided that

(a) access shall not be denied on the ground that the

bridge institution does not possess a rating from a

credit rating agency, or that rating is not

commensurate to the rating levels required to be

granted access to the systems referred to in this sub-

regulation;

(b) where the bridge institution does not meet the

membership or participation criteria for a relevant

payment, clearing or settlement system, stock

exchange, investor compensation scheme or deposit

guarantee scheme, the rights referred to in this sub-

regulation shall be exercised for such a period of time

as may be specified by the Resolution Committee, not

exceeding 24 months, renewable on application by the

bridge institution to the Resolution Committee.

(11) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred to the bridge

institution shall not have any rights over or in relation to the assets,

rights or liabilities transferred to the bridge institution, its board of

directors or senior management.

(12) The objectives of the bridge institution shall not imply any

duty or responsibility to shareholders or creditors of the institution

under resolution, and the board of directors or senior management

shall have no liability to such shareholders or creditors for acts and

omissions in the discharge of their duties unless the act or omission

implies gross negligence or serious misconduct which directly

affects rights of such shareholders or creditors.

(13) The Resolution Committee may further limit the liability of

a bridge institution and its board of directors or senior management

for acts and omissions in the discharge of their duties.

(1) The operation of a bridge institution shall respect the

following requirements

(a) the contents of the bridge institution’s constitutional

documents are approved by the Resolution Committee;

(b) subject to the bridge institution’s ownership structure,

the Resolution Committee either appoints or approves

the board of directors of the bridge institution;

(c) the Resolution Committee approves the remuneration

of the directors and determines their appropriate

responsibilities;

(d) the Resolution Committee approves the strategy and

risk profile of the bridge institution;

(e) the bridge institution is licenced in accordance with

the CRD or Directive 2014/65/EU, as applicable, and

has the necessary licence to carry out the activities or

services that it acquires by virtue of a transfer made

pursuant to regulation 63;

(f)

the bridge institution complies with the requirements

of, and is subject to supervision in accordance with the

CRD, CRR and Directive 2014/65/EU, as applicable;

(g) the operation of the bridge institution shall be in

accordance with the Union State aid framework and

the Resolution Committee may specify restrictions on

its operations accordingly

Provided that, notwithstanding the provisions referred to in

paragraphs (e) and (f) and where necessary to meet the resolution

objectives, the bridge institution may be established and licensed

without complying with the CRD or Directive 2014/65/EU for a

short period of time at the beginning of its operation. To that end,

the Resolution Committee shall submit a request in that sense to the

Authority. If the Authority decides to grant such a licence, it shall

indicate the period for which the bridge institution is waived from

complying with the requirements of those Directives.

(2) Subject to any restrictions imposed in accordance with

European Union or Maltese competition rules, the management of

the bridge institution shall operate the bridge institution with a

view to maintaining access to critical functions and selling the

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

definition "entity" in regulation 2(1), its assets, rights or liabilities,

to one or more private sector purchasers when conditions are

appropriate and within the period specified in sub-regulation (4) or,

where applicable, sub-regulation (6).

(3) The Resolution Committee shall take a decision that the

bridge institution is no longer a bridge institution within the

meaning of r egulation 40(2) in any of the following cases,

whichever occurs first

(a) the bridge institution merges with another entity;

(b) the bridge institution ceases to meet the requirements

of regulation 40(2);

(c) the sale of all or substantially all of the bridge

institution’s assets, rights or liabilities to a third party;

(d) the expiry of the period specified in sub-regulation (5)

or, where applicable, sub-regulation (6);

(e) the bridge institution’s assets are completely wound

down and its liabilities are completely discharged.

(4) Where the Resolution Committee seeks to sell the bridge

institution or its assets, rights or liabilities, the bridge institution or

the relevant assets or liabilities shall be marketed openly and

transparently, and the sale shall not materially misrepresent the

institution or the relevant assets or liabilities or unduly favour or

discriminate between potential purchasers. Any such sale shall be

made on commercial terms, having regard to the circumstances and

in accordance with the Union State aid framework.

(5) If none of the outcomes referred to in paragraphs (a), (b),

(c) and (e) of sub-regulation (3) applies, the Resolution Committee

shall terminate the operation of a bridge institution as soon as

possible and in any event two years after the date on which the last

transfer from an institution under resolution pursuant to the bridge

institution tool was made.

(6) The Resolution Committee may extend the period referred

to in sub-regulation (5) for one or more additional one-year periods

where such an extension

(a) supports the outcomes referred to in sub-regulation

(3)(a), (b), (c) or (e); or

(b) is necessary to ensure the continuity of essential

banking or financial services.

(7) Any decision of the Resolution Committee to extend the

period referred to in sub-regulation (5) shall be reasoned and shall

contain a detailed assessment of the situation, including of the

market conditions and outlook that justifies the extension.

(8) Where the operations of a bridge institution are terminated

in the circumstances referred to in sub-regulation (3)(c) or (d), the

bridge institution shall be wound up under normal insolvency

proceedings

Provided that, subject to regulation 37(7), any proceeds

generated as a result of the termination of the operation of the

bridge institution shall benefit the shareholders of the bridge

institution.

(9) Where a bridge institution is used for the purpose of

transferring assets and liabilities of more than one institution under

resolution, the obligation referred to in sub-regulation (8) shall

refer to the assets and liabilities transferred from each of the

institutions under resolution and not to the bridge institution itself.

(1) In order to give effect to the asset separation tool, the

Resolution Committee shall have the power to transfer assets,

rights or liabilities of an institution under resolution or a bridge

institution to one or more asset management vehicles

Provided that, subject to regulation 85, the transfer referred

to in this sub-regulation may take place without obtaining the

consent of the shareholders of the institutions under resolution or

any third party other than the bridge institution, and without

complying with any procedural requirements under company or

securities law.

(2) For the purposes of the asset separation tool, an asset

management vehicle shall be a legal person that meets all of the

following requirements

(a) it is wholly or partially owned by one or more public

authorities which may include the Resolution

Committee or the resolution financing arrangement

and is controlled by the Resolution Committee;

(b) it has been created for the purpose of receiving some

or all of the assets, rights and liabilities of one or more

institutions under resolution or a bridge institution.

(3) The asset management vehicle shall manage the assets

transferred to it with a view to maximising their value through

eventual sale or orderly wind down.

(4)

The Resolution Committee shall

(a) approve the contents of the asset management

vehicle’s constitutional documents;

(b) subject to the asset management vehicle’s ownership

structure, either appoint or approve the vehicle’s board

of directors;

(c) approve the remuneration of the directors and

determine their appropriate responsibilities;

(d) approve the strategy and risk profile of the asset

management vehicle; and

(e) ensure that the operation of the asset management

vehicle respects the provisions of paragraphs (a) to (d)

of this sub-regulation.

(5) The Resolution Committee may exercise the power

specified in sub-regulation (1) to transfer assets, rights or liabilities

only if

(a) the situation of the particular market for those assets is

of such a nature that the liquidation of those assets

under normal insolvency proceedings could have an

adverse effect on one or more financial markets;

(b) such a transfer is necessary to ensure the proper

functioning of the institution under resolution or

bridge institution; or

(c) such a transfer is necessary to maximise liquidation

proceeds.

(6) When applying the asset separation tool, the Resolution

Committee shall determine the consideration for which assets,

rights and liabilities are transferred to the asset management

vehicle in accordance with the principles established in regulation

36 and in accordance with the Union State aid framework. This

sub-regulation does not prevent the consideration having nominal

or negative value.

(7) Subject to regulation 37(7), any consideration paid by the

asset management vehicle in respect of the assets, rights or

liabilities acquired directly from the institution under resolution

shall benefit the institution under resolution. Consideration may be

paid in the form of debt issued by the asset management vehicle.

(8) Where the bridge institution tool has been applied, an asset

management vehicle may, subsequent to the application of the

bridge institution tool, acquire assets, rights or liabilities from the

bridge institution.

(9) The Resolution Committee may transfer assets, rights or

liabilities from the institution under resolution to one or more asset

management vehicles on more than one occasion and transfer

assets, rights or liabilities back from one or more asset management

vehicles to the institution under resolution provided that the

conditions specified in sub-regulation (10) are met. The institution

under resolution shall be obliged to take back any such assets,

rights or liabilities.

(10) The Resolution Committee may transfer rights, assets or

liabilities back from the asset management vehicle to the institution

under resolution in one of the following circumstances

(a) the possibility that the specific rights, assets or

liabilities might be transferred back is stated expressly

in the instrument by which the transfer was made;

(b) the specific rights, assets or liabilities do not in fact

fall within the classes of, or meet the conditions for

transfer of, rights, assets or liabilities specified in the

instrument by which the transfer was made

Provided that, in either of the cases referred in paragraphs

(a) and (b), the transfer back may be made within any period, and

shall comply with any other conditions, stated in that instrument for

the relevant purpose.

(11) Transfers between the institution under resolution and the

asset management vehicle shall be subject to the safeguards for

partial property transfers specified in regulations 73 to 80.

(12) Without prejudice to regulations 73 to 80, shareholders or

creditors of the institution under resolution and other third parties

whose assets, rights or liabilities are not transferred to the asset

management vehicle shall not have any rights over or in relation to

the assets, rights or liabilities transferred to the asset management

vehicle or its board of directors or senior management.

(13) The objectives of an asset management vehicle shall not

imply any duty or responsibility to shareholders or creditors of the

institution under resolution, and the board of directors or senior

management shall have no liability to such shareholders or

creditors for acts and omissions in the discharge of their duties

unless the act or omission implies gross negligence or serious

misconduct which directly affects rights of such shareholders or

creditors.

(14) The Resolution Committee may further limit the liability of

an asset management vehicle and its board of directors or senior

management for acts and omissions in the discharge of their duties.

(1) In order to give effect to the bail-in tool, the

Resolution Committee shall have the resolution powers specified in

regulation 63(1).

(2) The Resolution Committee shall apply the bail-in tool to

meet the resolution objectives specified in regulation 31, in

accordance with the resolution principles specified in regulation 34

for any of the following purposes

(a) to recapitalise an institution or an entity referred to in

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

regulation 2(1) that meets the conditions for resolution

to the extent sufficient to restore its ability to comply

with the conditions for obtaining a licence (to the

extent that those conditions apply to the entity) and to

continue to carry out the activities for which it is

licensed under the CRD or Directive 2014/65/EU,

where the entity is licensed under those Directives,

and to sustain sufficient market confidence in the

institution or entity;

(b) to convert to equity or reduce the principal amount of

claims or debt instruments that are transferred

(i)

to a bridge institution with a view to providing

capital for that bridge institution; or

(ii) under the sale of business tool or the asset

separation tool.

(3) The Resolution Committee may apply the bail-in tool for

the purpose referred to in sub-regulation (2)(a) only if there is a

reasonable prospect that the application of that tool together with

other relevant measures including measures implemented in

accordance with the business reorganisation plan required by

regulation 52 will, in addition to achieving relevant resolution

objectives, restore the institution or entity referred to in paragraphs

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

question to financial soundness and long-term viability

Provided that, where the conditions laid down in this sub-

regulation are not met, the Resolution Committee may apply any of

the resolution tools referred to in regulation 37(3)(a), (b) and (c)

and the bail-in tool referred to in sub-regulation (2) (b).

(4) The Resolution Committee may apply the bail-in tool to all

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

definition "entity" in regulation 2(1) while respecting in each case

the legal form of the institution or entity concerned or may change

the legal form.

(1) The bail-in tool may be applied to all liabilities of an

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

definition "entity" in regulation 2(1) that are not excluded from the

scope of that tool pursuant to sub-regulations (2) or (3)

Provided that contributions from senior debt holders, in

particular from insured deposits, uninsured deposits, bonds and all

other senior debt, will not be mandatory whether by conversion into

capital or by write-down of instruments before 1st January 2016.

(2) The Resolution Committee shall not exercise the write-

down or conversion powers in relation to the following liabilities

whether they are governed by the law of Malta, of another Member

State or of a third country

(a) covered deposits

Provided that this paragraph shall not prevent the

Resolution Committee, where appropriate, from

exercising those powers in relation to any amount of a

deposit that exceeds the coverage level provided for in

Article 6 of Directive 2014/49/EU;

(b) secured liabilities including covered bonds and

liabilities in the form of financial instruments used for

hedging purposes which form an integral part of the

cover pool and which according to Maltese law are

secured in a way similar to covered bonds;

(c) any liability that arises by virtue of the holding by the

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

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

client assets or client money including client assets or

client money held on behalf of UCITS as defined in

RECOVERY AND RESOLUTION

Article 1(2) of Directive 2009/65/EC or of AIF’s as

defined in point (a) of article 4(1) of Directive 2011/

61/EC, provided that such a client is protected under

the applicable insolvency law;

(d) any liability that arises by virtue of a fiduciary

relationship between the institution or entity referred

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

in regulation 2(1) (as fiduciary) and another person (as

beneficiary) provided that such a beneficiary is

protected under the applicable insolvency or civil law;

(e) liabilities to institutions, excluding entities that are

part of the same group, with an original maturity of

less than seven days;

(f)

liabilities with a remaining maturity of less than seven

days, owed to systems or operators of systems designated

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;

(g) a liability to any one of the following

(i)

an employee, in relation to accrued salary,

pension benefits or other fixed remuneration,

except for the variable component of

remuneration that is not regulated by a

collective bargaining agreement

Provided that this sub-paragraph shall not apply

to the variable component of the remuneration

of material risk takers as identified in Article

92(2) of the CRD;

(ii) a commercial or trade creditor arising from the

provision to the institution or entity referred to

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

"entity" in regulation 2(1) of goods or services

that are critical to the daily functioning of its

operations, including IT services, utilities and

the rental, servicing and upkeep of premises;

(iii) tax and social security authorities, provided that

those liabilities are preferred under the

applicable law;

(iv) deposit guarantee schemes arising from

contributions due in accordance with Directive

2014/49/EU

(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 regulation 108

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.

Provided that all secured assets relating to a covered bond

cover pool shall remain unaffected, segregated and with enough

funding. Neither that requirement, nor paragraph (b) shall prevent

the Resolution Committee, where appropriate, from exercising

those powers in relation to any part of a secured liability or a

liability for which collateral has been pledged that exceeds the

value of the assets, pledge, lien or collateral against which it is

secured

Provided further that without prejudice to the large

exposure rules in the CRR and the CRD, in order to provide for the

resolvability of institutions and groups, the Resolution Committee

shall limit, in accordance with regulation 17(5)(b), the extent to

which other institutions hold bail-inable liabilities save for liabilities

that are held at entities that are part of the same group.

(3) In exceptional circumstances, where the bail-in tool is

applied, the Resolution Committee may exclude or partially

exclude certain liabilities from the application of the write-down or

conversion powers where

(a) it is not possible to bail-in that liability within a

reasonable time notwithstanding the good faith efforts

of the Resolution Committee;

(b) the exclusion is strictly necessary and is proportionate

to achieve the continuity of critical functions and core

business lines in a manner that maintains the ability of

the institution under resolution to continue key

operations, services and transactions;

(c) the exclusion is strictly necessary and proportionate to

avoid giving rise to widespread contagion, in

particular as regards eligible deposits held by natural

persons and micro, small and medium sized

enterprises, which would severely disrupt the

functioning of financial markets, including of financial

market infrastructures, in a manner that could cause a

serious disturbance to the economy of Malta, of

another Member State or of the European Union; or

(d) the application of the bail-in tool to those liabilities

would cause a destruction in value such that the losses

borne by other creditors would be higher than if those

liabilities were excluded from bail-in

Provided that, 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).

(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).

(5) The resolution financing arrangement may make a

contribution referred to in sub-regulation (4) only where

(a) a contribution to loss absorption and recapitalisation

equal to an amount not less than 8% of the total

liabilities including own funds of the institution under

resolution, measured at the time of resolution action in

accordance with the valuation provided for in

regulation 36, has been made by the shareholders and

the holders of other instruments of ownership, the

holders of relevant capital instruments and other bail-

inable liabilities through write down, conversion or

otherwise; and

(b) the contribution of the resolution financing

arrangement does not exceed 5% of the total liabilities

including own funds of the institution under

resolution, measured at the time of resolution action in

accordance with the valuation provided for in

regulation 36.

(6) The contribution of the resolution financing arrangement

referred to in sub-regulation (4) may be financed by

(a) the amount available to the resolution financing

arrangement which has been raised through

contributions by institutions and Union branches in

accordance with regulation 100(6) and regulation 103;

(b) the amount that can be raised through ex-post

contributions in accordance with regulation 104 within

three years; and

(c) where the amounts referred to in paragraphs (a) and

(b) are insufficient, amounts raised from alternative

financing sources in accordance with regulation 105.

(7) In extraordinary circumstances, the Resolution Committee

may seek further funding from alternative financing sources after

(a) the 5% limit specified in sub-regulation (5)(b) has

been reached; and

(b) all unsecured, non-preferred liabilities, other than

eligible deposits, have been written down or converted

in full

Provided that, where the conditions laid down in this sub-

regulation are met, the resolution financing arrangement may make

a contribution from resources which have been raised through ex-

ante contributions in accordance with regulation 100(6) and

regulation 103 and which have not yet been used.

(8) By way of derogation from sub-regulation (5)(a), the

resolution financing arrangement may also make a contribution as

referred to in sub-regulation (4) provided that

(a) the contribution to loss absorption and recapitalisation

referred to in sub-regulation (5)(a) is equal to an

amount not less than 20% of the risk weighted assets

of the institution concerned;

(b) the resolution financing arrangement has at its

disposal, by way of ex-ante contributions (not

including contributions to a deposit guarantee scheme)

raised in accordance with regulation 100(6) and

regulation 103, an amount which is at least equal to

3% of covered deposits of all the credit institutions

authorised in Malta; and

(c) the institution concerned has assets below EUR 900

billion on a consolidated basis.

(9) When exercising the discretions under sub-regulation (3),

the Resolution Committee shall give due consideration to

(a) the principle that losses should be borne first by

shareholders and next, in general, by creditors of the

institution under resolution in order of preference;

(b) the level of loss absorbing capacity that would remain

in the institution under resolution if the liability or

class of liabilities were excluded; and

(c) the need to maintain adequate resources for resolution

financing.

(10) Exclusions under sub-regulation (3) may be applied either

to completely exclude a liability from write down or to limit the

extent of the write down applied to that liability.

(11) Before exercising the discretion to exclude a liability under

sub-regulation (3) the Resolution Committee shall notify the

European Commission and shall give due consideration to any

recommendation that it may receive from the European Commission

following such notification.

(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

Provided that and notwithstanding the provision of any other

law, the conditions set out in paragraphs (a) to (c) shall apply to sellers

of Additional Tier 1 instruments and Tier 2 instruments when the said

instruments are sold to a retail client as defined in point (11) of Article

4(1) 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 both of the following conditions are met at the time of

the purchase

(a) the retail client does not invest an aggregate amount

exceeding 10% of that client’s financial instrument

portfolio in liabilities referred to in sub-regulation (1);

and

(b) that 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.

(6) Where the value of total assets of the institutions and entities

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

are subject to the requirement referred to in regulation 45E does not

exceed EUR 50 billion, the only applicable requirement shall be that

set out in sub-regulation (2)(b).

(1) Institutions and entities referred to in paragraphs (b), (c)

or (d) of the definition "entity" in 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 45I.

(2)

The requirement referred to in sub-regulation (1) shall be

calculated in accordance with sub-regulations (3), (4), (5), (7) and (8)

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.

(3) Pursuant to Article 65 of the IFR, references to Article 92

of the CRR in these regulations relating to the own funds

requirements on an individual basis of investment firms other than

those referred to in Article 1(2) or (5) of the IFR shall be construed

in the following way

(a) references to point (c) of Article 92(1) of the CRR as

regards the total capital ratio requirement in these

regulations shall refer to Article 11(1) of the IFR;

(b) references to Article 92(3) of the CRR as regards the

total risk exposure amount in these regulations shall

refer to the applicable requirement in Article 11(1) of

the IFR multiplied by 12.5.

(4)

In accordance with the proviso to the definition "the

CRD" in regulation 2(1), references in these regulations to Article

104a of the CRD as regards additional own funds requirements of

investment firms other than those referred to in Article 1(2) or (5) of

the IFR shall be construed as referring to Article 40 of the IFD.

(5)

The Authority shall notify the Resolution Committee of

any additional own funds requirement imposed pursuant to point (a) of

Article 39(2) of the IFD on an investment firm that falls under the

scope of these regulations, and of any expectation for adjustments as

referred to in Article 41(2) of the IFD in respect of such investment

firm.

(1)Notwithstanding regulation 45, the Resolution

Committee shall exempt from the requirement 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).

(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

paragraphs (a) to (c) 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(4)

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 third 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 regulation 108 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).

(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.

(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 (1) year.

(2a) The Resolution Committee shall not determine the

requirement referred to in regulation 45(1) for liquidation entities

Provided that by way of derogation from this sub-

regulation, the Resolution Committee may assess whether it is

justified to determine the requirement referred to in regulation

45(1) for a liquidation entity on an individual basis in an amount

exceeding the amount sufficient to absorb losses in accordance

with paragraph (a) of sub-regulation (2). The Resolution

Committee shall take into account in its assessment, in particular,

any possible impact on financial stability and on the risk of

contagion to the financial system, including with regard to the

financing capacity of the depositor compensation scheme. Where

the Resolution Committee determines the requirement referred to in

regulation 45(1), the liquidation entity shall meet such requirement

by using one or more of the following

(a)

own funds;

(b)

liabilities that fulfil the eligibility criteria referred

to in Article 72a of the CRR, with

the exception of points

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

(c)

the liabilities referred to in regulation 45B(2)

Provided further that Article 77(2) and Article 78a of the

CRR shall not apply to liquidation entities for which the Resolution

Committee has not determined the requirement referred to in

regulation 45(1)

Provided further that holdings of own funds instruments

and eligible liabilities instruments issued by subsidiary institutions

which are liquidation entities for which the Resolution Committee

has not determined the requirement referred to in regulation 45(1)

shall not be deducted under Article 72e(5) of the CRR

Provided further that, by way of derogation from the third

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

or (d) of the definition "entity" in regulation 2(1), that is not itself a

resolution entity but is a subsidiary of a resolution entity or of a third-

country entity that would be a resolution entity if it were established in

the Union, shall deduct its holdings of own funds instruments in

subsidiary institutions that belong to the same resolution group and

that are liquidation entities for which the Resolution Committee has

not determined the requirement referred to in regulation 45(1) where

the aggregate amount of those holdings is equal to, or exceeds seven

percent (7%) of the total amount of its own funds and liabilities that

comply with the eligibility criteria set out in regulation 45F(2),

calculated annually as of 31 December as an average over the previous

twelve (12) months.

(3) For resolution entities, the amount referred to in 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

RECOVERY AND RESOLUTION

(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 (b) 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 (b) 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)(ii) 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-regulations (3), (4), (7) and (8),

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.

(1)The requirement referred to in regulation 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 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

ma te ri a l su bs i d ia r y o f a n on -E U G- S I I s ha ll c on s is t of th e

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 purpose of regulation 45H(2), where more than one

G-SII entity, that are part of the same G-SII, are resolution entities

or third-country entities that would be resolution entities if they

were established in the Union, the relevant European resolution

authorities shall calculate the amount referred to in sub-regulation

3

(a) for each resolution entity or third-country entity that

would be a resolution entity if it were established in

the Union; and

(b) for each Union parent undertaking as if it were 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.

(1) Resolution entities shall comply with the requirements

laid down in regulation 45B to regulation 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), (4) 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.

(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 basis.

(b) The Resolution Committee may, after 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) and (8) 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.

(1a) By way of derogation from paragraphs (a) and (b) of sub-

regulation (1), the Resolution Committee may decide to determine

the requirement laid down in regulation 45C on a consolidated

basis for a subsidiary as referred to in this paragraph where the

Resolution Committee concludes that all of the following

conditions are met

(a) the subsidiary meets one of the following conditions

(i)

the subsidiary is held directly by the

resolution entity and

-

the resolution entity is a Union

parent financial holding company or a Union

parent mixed financial holding company;

-

both the subsidiary and the

resolution entity are established in Malta and are

part of the same resolution group;

-

the resolution entity does not hold

directly any subsidiary institution or any

subsidiary entity referred to in paragraphs (b), (c)

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

where that entity is subject to the requirements set

out in this regulation or to the requirement

referred to in regulation 45C, other than the

subsidiary concerned; and

-

the

subsidiary

would

be

disproportionately affected by the deductions

required pursuant to Article 72e(5) of the CRR; or

(ii)

the subsidiary is subject to the requirement

referred to in Article 104a of the CRD on a consolidated

basis only and the determination of the requirement laid

down in regulation 45C on a consolidated basis, would

not lead to overstating the recapitalisation needs, for the

purposes of paragraph (b) of regulation 45C(1), of the

sub-group consisting of entities within the consolidation

perimeter concerned, in particular where there is a

prevalence of liquidation entities within the same

consolidation perimeter; and

(b) compliance with the requirement laid down in

regulation 45C on a consolidated basis as a substitute

for compliance with that requirement on an individual

basis, does not impair in a material way any of the

following

(i)

the credibility and feasibility of the group

resolution strategy;

(ii)

the subsidiary’s capacity to comply with its

own funds requirement after the exercise of write-down

and conversion powers; and

(iii) the adequacy of the internal loss transfer

and recapitalisation mechanism, including the write-

down or conversion, in accordance with regulation 59, of

relevant capital instruments and eligible liabilities of the

subsidiary concerned or of other entities in the resolution

group.

(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

RECOVERY AND RESOLUTION

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(2) and 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.

(2a) Where an entity as referred to in sub-regulation (1)

complies with the requirement referred to in regulation 45(1) on a

consolidated basis, the amount of own funds and eligible liabilities

of such entity shall include the following liabilities issued in

accordance with sub-regulation (2)(a) by a subsidiary established in

the Union included in the consolidation of such entity

(a) liabilities issued to and bought by the resolution entity,

either directly, or indirectly through other entities in

the same resolution group that are not included in the

consolidation of the entity complying with the

requirement referred to in regulation 45(1) on a

consolidated basis; and

(b) liabilities issued to an existing shareholder that is not

part of the same resolution group.

(2b) The liabilities referred to in paragraphs (a) and (b) of sub-

regulation (2a) shall not exceed t he amount determined by

subtracting from the amount of the requirement referred to in

regulation 45(1) applicable to the subsidiary included in the

consolidation the sum of all of the following

(a) the liabilities issued to and bought by the entity

complying with the requirement referred to in

regulation 45(1) on a consolidated basis, either

directly, or indirectly through other entities in the

same resolution group that are included in the

consolidation of such entity; and

(b) the amount of own funds that are issued in accordance

with sub-regulation (2)(b).

(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.

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.

(1)The Resolution Committee where it is the resolution

authority of the resolution entity together with the group-level

resolution authority, where different 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, that are part of the same G-SII, are resolution

entities or third-country entities that would be resolution entities if

they were established in the Union, discuss and, where appropriate

and consistent with the G-SII’s resolution strategy, agree on

(a)

the application of Article 72e of the CRR; and

(b)

any adjustment to minimise or eliminate the

difference between the sum of the amounts referred to in

paragraph (a) of regulation 45D(4) and point (a) of Article 12a

of the said CRR for individual resolution entities or third-

country entities, and the sum of the amounts referred to in

paragraph (b) of regulation 45D(4) and point (b) of Article 12a

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 or third-countries 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 point (a) of Article 12a of the

said CRR for individual resolution entities or third-country entities

that would be resolution entities if they were established in the Union

shall not be lower than the sum of the amounts referred to in

paragraph (b) of regulation 45D(4) and point (b) of Article 12a 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 consolidate

d 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 regul at ion in p aral lel with th e dev elo pment and t he

maintenance of resolution plans.

(1)

Institutions and entities referred to in paragraphs

(b), (c) or (d) of the definition "entity" in 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 regulation 108; 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 regulation

108; and

(c) the applicable requirement referred to in regulations

45E or 45F expressed in accordance with regulation

45(2).

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

entity unless the Resolution Committee has determined the

requirement referred to in regulation 45(1) for such entity in

accordance with the first proviso to regulation 45C(2a). In such a case,

the Resolution Committee shall determine the content and frequency

of the reporting and disclosure obligations referred to in Article 45i(5)

and (6) of the BRRD for such entity. The Resolution Committee shall

communicate those reporting and disclosure obligations to the

liquidation entity concerned. Those reporting and disclosure

obligations shall not go beyond what is necessary to monitor

compliance with the requirement determined pursuant to the first

proviso to regulation 45C(2a).

(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 45L.

The Resolution Committee shall inform the EBA of the

minimum requirement for own funds and eligible liabilities set in

accordance with regulation 45E or regulation 45F, including decisions

taken pursuant to paragraph (d) of regulation 45F(1), for each entity

established in Malta.

(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 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).

(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

Provided further that where, in accordance with sub-

regulation (1), the Resolution Committee has set a

compliance deadline ending after 1st January 2024, the

application date of regulation 45 as regards regulation

45I(3) shall be the same as the compliance deadline.

(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).

(1) When applying the bail-in tool, the Resolution

Committee shall assess, on the basis of a valuation that complies

with regulation 36, the aggregate of

(a) where relevant, the amount by which bail-inable

liabilities must be written down in order to ensure that

the net asset value of the institution under resolution is

equal to zero; and

(b) where relevant, the amount by which bail-inable

liabilities must be converted into shares or other types

of capital instruments in order to restore the Common

Equity Tier 1 capital ratio of either

(i) the institution under resolution; or

(ii) the bridge institution.

(2) The assessment referred to in sub-regulation (1) shall

establish the amount by which bail-inable liabilities need to be

written down or converted in order to restore the Common Equity

Tier 1 capital ratio of the institution under resolution or where

applicable establish the ratio of the bridge institution taking into

account any contribution of capital by the resolution financing

arrangement pursuant to regulation 101(1)(d), and to sustain

sufficient market confidence in the institution under resolution or

the bridge institution and enable it to continue to meet, for at least

one year, the licence conditions and to continue to carry out the

activities for which it is authorised under the CRD or Directive

2014/65/EU

Provided that, where the Resolution Committee intends to

use the asset separation tool referred to in regulation 42, the

amount by which bail-inable liabilities need to be reduced shall take

into account a prudent estimate of the capital needs of the asset

management vehicle as appropriate.

(3) Where capital has been written down in accordance with

regulations 59 to 62 and bail-in has been applied pursuant to

regulation 43(2) and the level of write-down based on the

preliminary valuation according to regulation 36 is found to exceed

requirements when assessed against the definitive valuation

according to regulation 36(10), a write-up mechanism may be

applied to reimburse creditors and then shareholders to the extent

necessary.

(4) The Resolution Committee shall establish and maintain

arrangements to ensure that the assessment and valuation is based

on information about the assets and liabilities of the institution

under resolution that is as up to date and as comprehensive as is

reasonably possible.

(1) When applying the bail-in tool in regulation 43(2) or

the write-down or conversion of capital instruments in regulation

59, the Resolution Committee shall, in respect of shareholders and

holders of other instruments of ownership, take one or both of the

following actions

(a) cancel existing shares or other instruments of

ownership or transfer them to bailed-in creditors;

(b) provided that, in accordance to the valuation carried

out under regulation 36, the institution under

resolution has a positive net value, dilute existing

shareholders and holders of other instruments of

ownership as a result of the conversion into shares or

other instruments of ownership of

(i)

relevant capital instruments issued by the

institution pursuant to the power referred to in

regulation 59(2); or

(ii) bail-inable liabilities issued by the institution

under resolution pursuant to the power referred

to in regulation 63(1)(f)

Provided that with regard to paragraph (b), the conversion

shall be conducted at a rate of conversion that severely dilutes

existing holdings of shares or other instruments of ownership.

(2) The actions referred to in sub-regulation (1) shall also be

taken in respect of shareholders and holders of other instruments of

ownership where the shares or other instruments of ownership in

question were issued or conferred in the following circumstances

(a) pursuant to conversion of debt instruments to shares or

other instruments of ownership in accordance with

contractual terms of the original debt instruments on

the occurrence of an event that preceded or occurred at

the same time as the assessment by the Resolution

Committee that the institution or entity referred to in

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

regulation 2(1) met the conditions for resolution;

(b) pursuant to the conversion of relevant capital

instruments to Common Equity Tier 1 instruments

pursuant to regulation 60.

(3) When considering which action to take in accordance with

sub-regulation (1), the Resolution Committee shall have regard to

(a) the valuation carried out in accordance with regulation

36;

(b) the amount by which the Resolution Committee has

assessed that Common Equity Tier 1 items must be

reduced and relevant capital instruments must be

written down or converted pursuant to regulation

60(1); and

(c) the aggregate amount assessed by the Resolution

Committee pursuant to regulation 46.

(4) By way of derogation from Articles 22 to 25 of the CRD,

the requirement to give a notice in Article 26 of the CRD, articles

10, 10A and 10B of the Investment Services Act and the Investment

Services Rules for Investment Services Providers, where the

a p pl ic a t io n o f t h e ba il - in to o l o r t he c on v e r s io n o f c a p it a l

instruments would result in the acquisition of or increase in a

qualifying holding in an institution as referred to in article 13(1) of

the Banking Act or article 10 of the Investment Services Act, the

Authority shall carry out the assessment required under those

Articles (and those articles) in a timely manner that does not delay

the application of the bail-in tool or the conversion of capital

instruments, or prevent resolution action from achieving the

relevant resolution objectives.

(5) If the Authority has not completed the assessment required

under sub-regulation (4) on the date of application of the bail-in

tool or the conversion of capital instruments, regulation 38(9) shall

apply to any acquisition of or increase in a qualifying holding by an

acquirer resulting from the application of the bail-in tool or the

conversion of capital instruments.

(1) When applying the bail-in tool, the Resolution

Committee shall exercise the write-down and conversion powers,

subject to any exclusions under regulation 44(2) and (3), meeting

the following requirements

(a) Common Equity Tier 1 items are reduced in

accordance with regulation 60(1)(a);

(b) if, and only if, the total reduction pursuant to

paragraph (a) is less than the sum of the amounts

referred to in regulation 47(3)(b) and (c), the

Resolution Committee reduces the principal amount of

Additional Tier 1 instruments to the extent required

and to the extent of their capacity;

(c) if, and only if, the total reduction pursuant to

paragraphs (a) and (b) is less than the sum of the

amounts referred to in regulation 47(3)(b) and (c), the

Resolution Committee reduces the principal amount of

Tier 2 instruments to the extent required and to the

extent of their capacity;

(d) if, and only if, the total reduction of shares or other

instruments of ownership and relevant capital

instruments pursuant to paragraphs (a), (b) and (c) is

less than the sum of the amounts referred to in

regulation 47(3)(b) and (c), the Resolution Committee

reduces to the extent required the principal amount of

subordinated debt that is not Additional Tier 1 or Tier

2 capital in accordance with the ranking of claims in

normal insolvency proceedings, in conjunction with

the write down pursuant to paragraphs (a), (b) and (c)

to produce the sum of the amounts referred to in

regulation 47(3)(b) and (c);

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

instruments of ownership, relevant capital instruments

and 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

regulation 108(4), in accordance with the hierarchy of

claims in normal insolvency proceedings, including the

ranking of deposits provided for in regulation 108,

pursuant to regulation 44, in conjunction with the write

down pursuant to paragraphs (a) to (d) to produce the

sum of the amounts referred to in regulation 47(3) (b) and

(c).

(2) When applying the write down or conversion powers, the

Resolution Committee shall allocate the losses represented by the

sum of the amounts referred to in regulation 47(3)(b) and (c)

equally between shares or other instruments of ownership and bail-

inable liabilities of the same rank by reducing the principal amount

of, or outstanding amount payable in respect of, those shares or

other instruments of ownership and bail-inable liabilities to the same

extent pro rata to their value except where a different allocation of

losses amongst liabilities of the same rank is allowed in the

circumstances specified in regulation 44(3)

Provided that this shall not prevent liabilities which have

been excluded from bail-in in accordance with regulation 44(2) and

(3) from receiving more favourable treatment than eligible

liabilities which are of the same rank in normal insolvency

proceedings.

(3) Before applying the write-down or conversion referred to in

sub-regulation (1)(e), the Resolution Committee shall convert or

reduce the principal amount on instruments referred to in sub-

regulation (1)(b), (c) and (d) when those instruments contain the

following terms and have not already been converted

(a) terms that provide for the principal amount of the

instrument to be reduced on the occurrence of any

event that refers to the financial situation, solvency or

levels of own funds of the institution or entity referred

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

in regulation 2(1);

(b) terms that provide for the conversion of the

instruments to shares or other instruments of

ownership on the occurrence of any such event.

(4) Where the principal amount of an instrument has been

reduced, but not to zero, in accordance with terms of the kind

referred to in sub-regulation (3)(a) before the application of the

bail-in pursuant to sub-regulation (1), the Resolution Committee

shall apply the write-down and conversion powers to the residual

amount of that principal in accordance with sub-regulation (1).

(5) When deciding on whether liabilities are to be written down

or converted into equity, the Resolution Committee shall not

convert one class of liabilities, while a class of liabilities that is

subordinated to that class remains substantially unconverted into

equity or not written down, unless otherwise permitted under

regulation 44(2) and (3).

(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.

(1) The Resolution Committee shall comply with this

regulation when applying the write-down and conversion powers to

liabilities arising from derivatives.

(2) The Resolution Committee shall exercise the write-down

and conversion powers in relation to a liability arising from a

derivative only upon or after closing-out the derivatives. Upon

entry into resolution, the Resolution Committee shall be

empowered to terminate and close out any derivative contract for

that purpose.

(3) Where a derivative liability has been excluded from the

application of the bail-in tool under regulation 44(3), the

Resolution Committee shall not be obliged to terminate or close out

the derivative contract.

(4) Where derivative transactions are subject to a netting

agreement, the Resolution Committee or an independent valuer

shall determine as part of the valuation under regulation 36 the

liability arising from those transactions on a net basis in accordance

with the terms of the agreement.

(5) The Resolution Committee shall determine the value of

liabilities arising from derivatives in accordance with the

following

(a) appropriate methodologies for determining the value

of classes of derivatives, including transactions that

are subject to netting agreements;

(b) principles for establishing the relevant point in time at

which the value of a derivative position should be

established; and

(c) appropriate methodologies for comparing the

destruction in value that would arise from the close out

and bail-in of derivatives with the amount of losses

that would be borne by derivatives in a bail-in.

(1) When the Resolution Committee exercises the powers

specified in regulation 59(3) and regulation 63(1)(f), they may

apply a different conversion rate to different classes of capital

instruments and liabilities in accordance with one or both of the

principles referred to in sub-regulations (2) and (3).

(2) The conversion rate shall represent appropriate

compensation to the affected creditor for any loss incurred by

virtue of the exercise of the write down and conversion powers.

(3) When different conversion rates are applied according to

sub-regulation (1), the conversion rate applicable to liabilities that

are considered to be senior under applicable insolvency law shall

be higher than the conversion rate applicable to subordinated

liabilities.

(1) Where the Resolution Committee applies the bail-in

tool to recapitalise an institution or entity referred to in paragraphs

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

accordance with regulation 43(2)(a), arrangements shall be adopted

to ensure that a business reorganisation plan for that institution or

entity is drawn up and implemented in accordance with regulation

(2) The arrangements referred to in sub-regulation (1) may

include the appointment by the Resolution Committee of a person

or persons appointed in accordance with regulation 72(1) with the

objective of drawing up and implementing the business

reorganisation plan required by regulation 52.

52. (1) Within one month after the application of the bail-in

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

(d) of the definition "entity" in regulation 2(1) in accordance with

regulation 43(2)(a), the board of directors or the person or persons

appointed in accordance with regulation 72(1) shall draw up and

submit to the Resolution Committee, a business reorganisation plan

that satisfies the requirements of sub-regulations (4) and (5). Where

the Union State aid framework is applicable, the Resolution

Committee shall ensure that such a plan is compatible with the

restructuring plan that the institution or entity referred to in

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

2(1) is required to submit to the European Commission under that

framework.

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

resolution authority, and the bail-in tool in regulation 43(2)(a) is

applied to two or more group entities, the business reorganisation

plan shall be prepared by the Union parent institution and cover all

of the institutions in the group in accordance with the procedure

specified in regulations 7 and 8 and shall be submitted to the

Resolution Committee. The Resolution Committee, in its capacity

as the group-level resolution authority, shall communicate the plan

to the European resolution authorities concerned and to the EBA.

(3)

In exceptional circumstances, and if it is necessary for

achieving the resolution objectives, the Resolution Committee may

extend the period in sub-regulation (1) up to a maximum of two

months from the application of the bail-in tool

Provided that, where the business reorganisation plan is

required to be notified within the Union State aid framework, the

Resolution Committee may extend the period in sub-regulation (1)

up to a maximum of two months since the application of the bail-in

tool or until the deadline laid down by the Union State aid

framework, whichever occurs earlier.

(4) A business reorganisation plan shall set out measures

aiming to restore the long-term viability of the institution or entity

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

regulation 2(1) or parts of its business within a reasonable time-

scale. Those measures shall be based on realistic assumptions as to

the economic and financial market conditions under which the

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

definition "entity" in regulation 2(1) will operate

Provided that the business reorganisation plan shall take

account, inter alia, of the current state and future prospects of the

financial markets, reflecting best-case and worst-case assumptions,

including a combination of events allowing the identification of the

institution’s main vulnerabilities. Assumptions shall be compared

with appropriate sector-wide benchmarks.

(5) A business reorganisation plan shall include at least the

following elements

(a) a detailed diagnosis of the factors and problems that

caused the institution or entity referred to in

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

regulation 2(1) to fail or to be likely to fail, and the

circumstances that led to its difficulties;

(b) a description of the measures aiming to restore the

long-term viability of the institution or entity referred

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

in regulation 2(1) that are to be adopted;

(c) a timetable for the implementation of those measures.

(6) Measures aiming to restore the long-term viability of an

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

definition "entity" in regulation 2(1) may include

(a) the reorganisation of the activities of the institution or

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

definition "entity" in regulation 2(1);

(b) changes to the operational systems and infrastructure

within the institution;

(c) the withdrawal from loss-making activities;

(d) the restructuring of existing activities that can be made

competitive;

(e) the sale of assets or of business lines.

(7)

Within one month of the date of submission of the business

reorganisation plan, the Resolution Committee shall assess the

likelihood that the plan, if implemented, will restore the long-term

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

or (d) of the definition "entity" in regulation 2(1). The assessment

sha ll be completed i n agreement wi th the Aut horit y. I f the

Resolution Committee and the Authority are satisfied that the plan

would achieve that objective, the Resolution Committee shall

approve the plan.

(8) If the Resolution Committee is not satisfied that the plan

would achieve the objective referred to in sub-regulation (7), the

Resolution Committee, in agreement with the Authority, shall

notify the board of directors or the person or persons appointed in

accordance with regulation 72(1) of its concerns and require the

amendment of the plan in a way that addresses those concerns.

(9) Within two weeks from the date of receipt of the

notification referred to in sub-regulation (8), the board of directors

or the person or persons appointed in accordance with regulation

72(1) shall submit an amended plan to the Resolution Committee

for approval. The Resolution Committee shall assess the amended

plan, and shall notify the board of directors or the person or persons

appointed in accordance with regulation 72(1) within one week

whether it is satisfied that the plan, as amended, addresses the

concerns notified or whether further amendment is required.

(10) The board of directors or the person or persons appointed in

accordance with regulation 72(1) shall implement the

reorganisation plan as agreed by the Resolution Committee and

Authority, and shall submit a report to the Resolution Committee at

least every six months on progress in the implementation of the

plan.

(11) The board of directors or the person or persons appointed in

accordance with regulation 72(1) shall revise the plan if, in the

opinion of the Resolution Committee with the agreement of the

Authority, it is necessary to achieve the aim referred to in sub-

regulation (4), and shall submit any such revision to the Resolution

Committee for approval.

(1) Where a Resolution Committee exercises a power

referred to in regulation 59(2) and in regulation 63(1)(e) to (i), the

reduction of principal or outstanding amount due, conversion or

cancellation takes effect and is immediately binding on the

institution under resolution and affected creditors and shareholders.

(2) The Resolution Committee shall have the power to

complete or require the completion of all the administrative and

procedural tasks necessary to give effect to the exercise of a power

referred to in regulation 59(2) and in regulation 63(1)(e) to (i),

including

(a) the amendment of all relevant registers;

(b) the delisting or removal from trading of shares or other

instruments of ownership or debt instruments;

(c) the listing or admission to trading of new shares or

other instruments of ownership;

(d) the relisting or readmission of any debt instruments

which have been written down, without the

requirement for the issuing of a prospectus pursuant to

Directive 2003/71/EC of the European Parliament and

of the Council of 4 November 2003 on the prospectus

to be published when securities are offered to the

public or admitted to trading and amending Directive

2001/34/EC, as amended from time to time, including

any implementing measures that have been or may be

issued thereunder.

(3) Where the Resolution Committee reduces to zero the

principal amount of, or outstanding amount payable in respect of, a

liability by means of the power referred to in regulation 63(1)(e),

that liability and any obligations or claims arising in relation to it

that are not accrued at the time when the power is exercised shall

be treated as discharged for all purposes, and shall not be provable

in any subsequent proceedings in relation to the institution under

resolution or any successor entity in any subsequent winding up.

(4) Where the Resolution Committee reduces in part, but not in

full, the principal amount of, or outstanding amount payable in

respect of, a liability by means of the power r eferred to in

regulation 63(1)(e)

(a) the liability shall be discharged to the extent of the

amount reduced;

(b) the relevant instrument or agreement that created the

original liability shall continue to apply in relation to

the residual principal amount of, or outstanding

amount payable in respect of the liability, subject to

any modification of the amount of interest payable to

reflect the reduction of the principal amount, and any

further modification of the terms that the Resolution

Committee might make by means of the power referred

to in regulation 63(1)(j).

(1) Without prejudice to regulation 63(1)(i), institutions

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

"entity" in regulation 2(1) shall, where applicable, be required to

maintain at all times a sufficient amount of authorised share capital

or of other Common Equity Tier 1 instruments, so that, in the event

that the Resolution Committee exercises the powers referred to in

regulation 63(1)(e) and (f) in relation to an institution or an entity

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

regulation 2(1) or any of its subsidiaries, the institution or entity

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

regulation 2(1) is not prevented from issuing sufficient new shares

or other instruments of ownership to ensure that the conversion of

liabilities into shares or other instruments of ownership could be

carried out effectively.

(2) The Resolution Committee shall assess whether it is

appropriate to impose the requirement laid down in sub-regulation

(1) in the case of a particular institution or entity referred to in

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

2(1) in the context of the development and maintenance of the

resolution plan for that institution or group, having regard, in

particular, to the resolution actions contemplated in that plan. If the

resolution plan provides for the possible application of the bail-in

tool, the Resolution Committee shall verify that the authorised

share capital or other Common Equity Tier 1 instruments is

sufficient to cover the sum of the amounts referred to in regulation

47(3)(b) and (c).

(3) Notwithstanding anything contained in any other law, there

shall be no procedural impediments to the conversion of liabilities

to shares or other instruments of ownership existing by virtue of

their instruments of incorporation or statutes, including pre-

emption rights for shareholders or requirements for the consent of

shareholders to an increase in capital.

(4) This regulation is without prejudice to the amendments to

Directives 82/891/EEC, 2004/25/EC, 2005/56/EC, 2007/36/EC,

2011/35/EU and Directive 2012/30/EU set out in Title X of the

BRRD.

(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 regulation

108(3);

(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

regulation 108(6), 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 regulation 108(4)

and (5).

(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 regulation 44(3)

amounts to more than 10 % of that class, it shall

immediately assess the impact of that particular fact on

the resolvability of that institution or entity, including the

impact on the resolvability resulting from the risk of

breaching the creditor safeguards 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.

(1) The Ministry responsible for Finance may provide

extraordinary public financial support through additional financial

stabilisation tools in accordance with sub-regulation (3), regulation

37(10) and with Union State aid framework, for the purpose of

participating in the resolution of an institution or an entity referred

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

regulation 2(1), including by intervening directly in order to avoid

its winding up, with a view to meeting the objectives for resolution

referred to in regulation 31(2) in relation to Malta or the European

Union as a whole. Such an action shall be carried out under the

leadership of the Ministry responsible for Finance or the

government in close cooperation with the Resolution Committee.

(2) In order to give effect to the government financial

stabilisation tools, the Ministry responsible for Finance shall have

the relevant resolution powers specified in regulations 63 to 72, and

shall ensure that regulations 66, 68, 83 and 117 apply.

(3) The government financial stabilisation tools shall be used

as a last resort after having assessed and exploited the other

r e s o l u t i o n t o o l s t o t h e m a x i m u m ex t e n t p r a c t i c a b l e w h i l st

maintaining financial stability, as determined by the Ministry

responsible for Finance or the government after consulting the

Resolution Committee.

(4) When applying the government financial stabilisation tools,

the Ministry responsible for Finance and the Resolution Committee

shall apply the tools only if all the conditions laid down in

regulation 32(1) as well as one of the following conditions are met

(a) the Ministry responsible for Finance and the

Resolution Committee, after consulting the Central

bank and the Authority, determine that the application

of the resolution tools would not suffice to avoid a

significant adverse effect on the financial system;

(b) the Ministry responsible for Finance and the

Resolution Committee determine that the application

of the resolution tools would not suffice to protect the

public interest, where extraordinary liquidity

assistance from the Central bank has previously been

given to the institution;

(c) in respect of the temporary public ownership tool, the

Ministry responsible for Finance, after consulting the

Authority and the Resolution Committee, determines

that the application of the resolution tools would not

suffice to protect the public interest, where public

equity support through the equity support tool has

previously been given to the institution.

(5) The financial stabilisation tools shall consist of the

following

(a) public equity support tool as referred to in regulation

57;

(b) temporary public ownership tool as referred to in

regulation 58.

(1) The Ministry responsible for Finance may, while

c o m p l y i n g w i t h M a l t e s e c o m p a n y l a w, p a r t i c i p a t e i n t h e

recapitalisation of an institution or an entity referred to in

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

2(1) by providing capital to the latter in exchange for the following

instruments, subject to the requirements of the CRR

(a) Common Equity Tier 1 instruments;

(b) Additional Tier 1 instruments or Tier 2 instruments.

(2) To the extent that the Government of Malta’s shareholding

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

of the definition "entity" in regulation 2(1) permits, such

institutions or entities subject to public equity support tools in

accordance with this regulation shall be managed on a commercial

and professional basis.

(3) Where the Ministry responsible for Finance provides public

equity support tools in accordance with this regulation, it shall

ensure that its holding in the institution or entity referred to in

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

2(1) is transferred to the private sector as soon as commercial and

financial circumstances allow.

(1) The Ministry responsible for Finance may take an

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

definition "entity" in regulation 2(1) into temporary public

ownership.

(2) For that purpose one or more share transfer orders may be

made in which the transferee is

(a) a nominee of the Government of Malta; or

(b) a company wholly owned by the Government of Malta.

(3) Institutions or entities referred to in paragraphs (b), (c) or

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

temporary public ownership tool in accordance with this regulation

shall be managed on a commercial and professional basis and shall

be transferred to the private sector as soon as commercial and

financial circumstances allow.

(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.

(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.

(2) The Resolution Committee shall have the power to write

down or convert relevant capital instruments, and eligible liabilities

as referred to in sub-regulation (1A) into shares or other instruments

of ownership of institutions and entities referred to in paragraphs

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

(3) The Resolution Committee shall exercise the write-down or

conversion power, in accordance with regulation 60 and without delay,

in relation to relevant capital instruments, 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

(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;

(c) in the case of relevant capital instruments issued by a

subsidiary and where those capital instruments are

RECOVERY AND RESOLUTION

recognised for the purposes of meeting own funds

requirements on an individual and on a consolidated

basis, a joint determination taking the form of a joint

decision is made by -

(i)

where the Authority is the consolidating

supervisor, the appropriate authority and the

overseas appropriate authority of the Member

State of the subsidiary; or

(ii) where the Authority is responsible for the

subsidiary, the appropriate authority, the

appropriate authority of the Member State of the

consolidating supervisor and the overseas

appropriate authorities of the Member State of

the other subsidiaries, if any;

in accordance with regulation 92(4) and (5) that unless

the write down or conversion power is exercised in

relation to those instruments, the group will no longer

be viable;

(d) in the case of relevant capital instruments issued at the

level of the parent undertaking and where those capital

instruments are recognised for the purposes of meeting

own funds requirements on an individual basis at the

level of the parent undertaking or on a consolidated

basis, and: where the Authority is the consolidating

supervisor, the appropriate authority; or, where the

Authority is responsible for a subsidiary, the overseas

appropriate authority of the Member State of the

consolidating supervisor; makes a determination that

unless the write down or conversion power is

exercised in relation to those instruments, the group

will no longer be viable;

(e) extraordinary public financial support is required by

the institution or the entity referred to in paragraphs

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

2(1) except in any of the circumstances set out in

regulation 32(4)(d)(iii).

(4) For the purposes of sub-regulation (3), an institution or an

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

"entity" in regulation 2(1) or a group shall be deemed to be no

longer viable only if both of the following conditions are met

(a) the institution or the entity referred to in paragraphs

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

2(1) or the group is failing or likely to fail;

(b) having regard to timing and other relevant

circumstances, there is no reasonable prospect that any

action, including alternative private sector measures or

supervisory action (including early intervention

measures), other than the write down or conversion of

capital instruments, or eligible liabilities as referred to in

sub-regulation (1A), independently or in combination

with a resolution action, would prevent the failure of

the institution or the entity referred to in paragraphs

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

2(1) or the group within a reasonable time-frame.

(5) For the purposes of sub-regulation (4)(a), an institution or

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

"entity" in regulation 2(1) shall be deemed to be failing or likely to

fail where one or more of the circumstances set out in regulation

32(4) occurs.

(6) For the purposes of sub-regulation (4)(a), a group shall be

deemed to be failing or likely to fail where the group infringes or

there are objective elements to support a determination that the

group, in the near future, will infringe its consolidated prudential

requirements in a way that would justify action by the Authority

including but not limited to because the group has incurred or is

likely to incur losses that will deplete all or a significant amount of

its own funds.

(7) A relevant capital instrument issued by a subsidiary shall

not be written down to a greater extent or converted on worse terms

pursuant to sub-regulation (3)(c) than equally ranked capital

instruments at the level of the parent undertaking which have been

written down or converted.

(8) Where the appropriate authority makes a determination

referred to in sub-regulation (3), it shall, where it is responsible for

a subsidiary, or where the Authority is the consolidating supervisor,

immediately notify the European resolution authority responsible

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

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

(9) Before making a determination referred to in sub-regulation

(3)(c) in relation to a subsidiary that issues relevant capital

instruments that are recognised for the purposes of meeting the own

funds requirements on an individual and on a consolidated basis,

the appropriate authority shall comply with the notification and

consultation requirements laid down in regulation 62.

(10) Before exercising the power to write down or convert

capital instruments, or eligible liabilities as referred to in sub-

regulation (1A), the Resolution Committee shall ensure that a

valuation of the assets and liabilities of the institution or the entity

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

regulation 2(1) is carried out in accordance with regulation 36. That

valuation shall form the basis of the calculation of the write down

to be applied to the relevant capital instruments, or eligible liabilities

as referred to in sub-regulation (1A). in order to absorb losses and

the level of conversion to be applied to relevant capital instruments,

or eligible liabilities as referred to in sub-regulation (1A). in order to

recapitalise the institution or the entity referred to in paragraphs

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

(1) When complying with the requirement laid down in

regulation 59, the Resolution Committee shall exercise the write-

down or conversion power in accordance with the priority of claims

under normal insolvency proceedings, in a way that produces the

following results

(a) Common Equity Tier 1 items are reduced first in

proportion to the losses and to the extent of their

capacity and the Resolution Committee takes one or

both of the actions specified in regulation 47(1) in

respect of holders of Common Equity Tier 1

instruments;

(b) the principal amount of Additional Tier 1 instruments

is written down or converted into Common Equity Tier

1 instruments or both, to the extent required to achieve

the resolution objectives set out in regulation 31 or to

the extent of the capacity of the relevant capital

instruments, whichever is lower;

(c) the principal amount of Tier 2 instruments is written

down or converted into Common Equity Tier 1

instruments or both, to the extent required to achieve

the resolution objectives set out in regulation 31 or to

the extent of the capacity of the relevant capital

instruments, whichever is lower.

(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.

(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).

(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

(a) those Common Equity Tier 1 instruments are issued by

the institution or the entity referred to in paragraphs

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

2(1) or by a parent undertaking of the institution or the

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

definition "entity" in regulation 2(1) with the

agreement

(i)

where the Resolution Committee is responsible

for the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1), of the Resolution

Committee or, where relevant, the European

resolution authority responsible for the parent

undertaking; or

(ii) where the Resolution Committee is responsible

for the parent undertaking, the European

resolution authority of the institution or the

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

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

where relevant, of the Resolution Committee;

(b) those Common Equity Tier 1 instruments are issued

prior to any issuance of shares or other instruments of

ownership by that institution or that entity referred to

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

regulation 2(1) for the purposes of provision of own

funds by the Government of Malta or a government

entity;

(c) those Common Equity Tier 1 instruments are awarded

and transferred without delay following the exercise of

the conversion power;

(d) the conversion rate that determines the number of

Common Equity Tier 1 instruments that are provided

in respect of each relevant capital instrument, or each

eligible liability as referred to in regulation 59(1A)

complies with the principles set out in regulation 50

and any guidelines developed by the EBA pursuant to

Article 50(4) of the BRRD.

(4) For the purposes of the provision of Common Equity Tier 1

instruments in accordance with sub-regulation (3), the Resolution

Committee may require institutions and entities referred to in

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

2(1) to maintain at all times the necessary prior authorisation to

issue the relevant number of Common Equity Tier 1 instruments.

(5) Where an institution meets the conditions for resolution and

the Resolution Committee decides to apply a resolution tool to that

institution, the Resolution Committee shall comply with the

requirement laid down in regulation 59(3) before applying the

resolution tool.

(1) Where the relevant capital instruments are recognised

for the purposes of meeting the own funds requirem ents in

accordance with Article 92 of the CRR on an individual basis, the

authority responsible for making the determination referred to in

regulation 59(3) shall

(a) where the institution or the entity referred to in

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

regulation 2(1) has been licensed in Malta in

accordance with Title III of the CRD, be the

appropriate authority; or

(b) where the institution or entity referred to in paragraphs

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

2(1) has been authorised in another Member State in

accordance with Title III of the CRD, be the overseas

appropriate authority of the Member State concerned.

(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.

(2) Where relevant capital instruments are issued by an

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

definition "entity" in regulation 2(1) that is a subsidiary and are

recognised for the purposes of meeting the own funds requirements

on an individual and on a consolidated basis, the authority

responsible for making the determinations referred to in regulation

59(3) shall be the following

(a) the

authority

responsible

for

making

the

determinations referred to in regulation 59(3)(b) shall

(i)

where the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) that issued those

instruments has been established in Malta in

accordance with Title III of the CRD, be the

appropriate authority; or

(ii) where the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) that issued those

instruments has been established in another

Member State in accordance with Title III of the

CRD, be the overseas appropriate authority of

the Member State concerned;

(b) the authorities responsible for making the joint

determination taking the form of a joint decision

referred to in regulation 59(3)(c) shall

(i)

where the Authority is the consolidating

supervisor and the institution or the entity

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

definition "entity" in regulation 2(1) that issued

those instruments has been established in

another Member State in accordance with Title

III of the CRD, be the appropriate authority and

the overseas appropriate authority of the

Member State concerned; or

(ii) where the institution or the entity referred to in

paragraphs (b), (c) or (d) of the definition

"entity" in regulation 2(1) that issued those

instruments has been established in Malta in

accordance with Title III of the CRD, be the

appropriate authority and the overseas

appropriate authority of the Member State of the

consolidating supervisor.

(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.

(2) When making a determination referred to in regulation

59(3)(c), (d) or (e) in the case of an institution or of a group with

cross-border activity, the appropriate authority shall take into

account the potential impact of the resolution in Malta and in all the

Member States where the institution or the group operate.

(3) The appropriate authority shall accompany a notification

made pursuant to sub-regulation (1) with an explanation of the

reasons why it is considering making the determination in question.

(4) Where a notification has been made pursuant to sub-

regulation (1), the appropriate authority, after consulting the

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

regulation (1), shall assess the following matters

(a) whether an alternative measure to the exercise of the

write down or conversion power in accordance with

regulation 59(3) is available;

(b) if such an alternative measure is available, whether it

can feasibly be applied;

(c) if such an alternative measure could feasibly be

applied, whether there is a realistic prospect that it

would address, in an adequate time-frame, the

circumstances that would otherwise require a

determination referred to in regulation 59(3) to be

made.

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

shall mean early intervention measures referred to in regulation 27,

measures r eferred to in regulation 9(1) of the Banking Act

(Supervisory Review) Regulations, measures referred to in

Schedule III of the Investment Services Act (Supervisory Review)

Regulations or a transfer of funds or capital from the parent

undertaking.

(6) Where, pursuant to sub-regulation (4), the appropriate

authority, after consulting the authorities notified in terms of sub-

regulation (1), assesses that one or more alternative measures are

available, can feasibly be applied and would deliver the outcome

referred to in sub-regulation (4)(c), it shall ensure that those

measures are applied.

(7) Where, in a case referred to in sub-regulation (1)(a), and

pursuant to sub-regulation (4), the appropriate authority, after

consulting the authorities notified in terms of sub-regulation (1),

assesses that no alternative measures are available that would

deliver the outcome referred to in sub-regulation (4)(c), the

appropriate authority shall decide whether the determination

referred to in regulation 59(3) under consideration is appropriate.

(8) Where the appropriate authority decides to make a

determination under regulation 59(3)(c), it shall immediately notify

the overseas appropriate authorities of the Member States in which

the affected subsidiaries are located and the determination shall

take the form of a joint decision as set out in regulation 92(4) and

(5). In the absence of a joint decision, no determination under

regulation 59(3)(c) shall be made.

(9) Where an affected subsidiary is located in Malta, the

Resolution Committee shall promptly implement a decision to

write down or convert capital instruments made in accordance with

this regulation, having due regard to the urgency of the

circumstances.

(1) The Resolution Committee shall have all the powers

necessary to apply the resolution tools to institutions and to entities

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

regulation 2(1) that meet the applicable conditions for resolution.

In particular, the Resolution Committee shall have the following

resolution powers, which may be exercised individually or in any

combination

(a) the power to require any person to provide any

information required for the Resolution Committee to

decide upon and prepare a resolution action, including

updates and supplements of information provided in

the resolution plans and including requiring

information to be provided through on-site

inspections;

(b) the power to take control of an institution under

resolution and exercise all the rights and powers

conferred upon the shareholders, other owners and the

board of directors of the institution under resolution;

RECOVERY AND RESOLUTION

(c) the power to transfer shares or other instruments of

ownership issued by an institution under resolution;

(d) the power to transfer to another entity, with the

consent of that entity, rights, assets or liabilities of an

institution under resolution;

(e) the power to reduce, including to reduce to zero, the

principal amount of or outstanding amount due in

respect of bail-inable liabilities, of an institution under

resolution;

(f)

the power to convert bail-inable liabilities of an

institution under resolution into ordinary shares or

other instruments of ownership of that institution or

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

definition "entity" in regulation 2(1), a relevant parent

institution or a bridge institution to which assets,

rights or liabilities of the institution or the entity

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

definition "entity" in regulation 2(1) are transferred;

(g) the power to cancel debt instruments issued by an

institution under resolution except for secured

liabilities subject to regulation 44(2);

(h) the power to reduce, including to reduce to zero, the

nominal amount of shares or other instruments of

ownership of an institution under resolution and to

cancel such shares or other instruments of ownership;

(i)

the power to require an institution under resolution or

a relevant parent institution to issue new shares or

other instruments of ownership or other capital

instruments, including preference shares and

contingent convertible instruments;

(j)

the power to amend or alter the maturity of debt

instruments and other bail-inable liabilities issued by an

institution under resolution or amend the amount of

interest payable under such instruments and other bail-

inable liabilities, or the date on which the interest

becomes payable, including by suspending payment

for a temporary period, except for secured liabilities

subject to regulation 44(2);

(k) the power to close out and terminate financial

contracts or derivatives contracts for the purposes of

applying regulation 49;

(l)

the power to remove or replace the board of directors

and senior management of an institution under

resolution;

(m) the power to require the Authority to assess the buyer

of a qualifying holding in a timely manner by way of

derogation from the time-limits laid down in Article

22 of the CRD and Article 12 of Directive 2014/65/

EU.

(2)

When applying the resolution tools and exercising the

resolution powers, the Resolution Committee shall not be subject to

any of the following requirements that would otherwise apply by

virtue of Maltese law or contract or otherwise

(a) subject to regulation 3(4) and regulation 85(1),

requirements to obtain approval or consent from any

person either public or private, including the

shareholders or creditors of the institution under

resolution;

(b) prior to the exercise of the power, procedural

requirements to notify any person including any

requirement to publish any notice or prospectus or to

file or register any document with any other authority

Provided that the Resolution Committee can exercise the

powers under this regulation irrespective of any restriction on, or

requirement for consent for, transfer of the financial instruments,

rights, assets or liabilities in question that might otherwise apply

Provided further that paragraph (b) shall be without

prejudice to the requirements laid down in regulations 81 and 83

and any notification requirements under the Union State aid

framework.

(3) Where any of the powers listed in sub-regulation (1) are not

applicable to an entity as a result of its specific legal form, the

Resolution Committee shall have powers which are as similar as

possible including in terms of their effects.

(4) Where the Resolution Committee exercises its powers

pursuant to sub-regulation (3), the safeguards provided for in these

regulations, or safeguards that deliver the same effect, shall be

applied to the persons affected, including shareholders, creditors

and counterparties.