The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) for contractual recognition of stay powers laid down in the Bank Recovery and Resolution Directive (BRRD). These RTS support the effective application of temporary restrictions on early termination rights (resolution stays) in relation to financial contracts governed by the law of a third country. These standards are the first EBA mandate stemming from the revised BRRD and aim at promoting the effective application of recovery and resolution powers to banks and banking groups and to foster convergence of practices between relevant authorities and institutions across the EU. The consultation runs until 15 August 2020.
The BRRD requires Member States to ensure that their resolution authorities can effectively make use of the stay powers on contracts that an institution or entity has entered into, in case resolution powers or crisis prevention measures are applied.
These draft RTS specify the contents of the contractual term required to be included in relevant financial contracts where no alternative mechanism (i.e. statutory) exists to secure the recognition by the counterparty of the resolution authority’s powers to suspend or restrict rights and obligations. The approach proposed by the EBA is designed to strike a balance between the need to ensure harmonisation and the need for flexibility so as to take into account the specificities of a given third country law or type of financial contract.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 15 August 2020.
The EBA will hold a public hearing on the draft RTS, which will take place via conference call on 16 July 2020 from 10:00 to 13:00 CET. The dial in details will be communicated in due course.
All contributions received will be published following the closure of the consultation, unless specifically requested otherwise.
The proposed draft RTS are based on Article 71a(5) of the BRRD, which requires the EBA to develop draft RTS to further determine the contents of the terms required in the first paragraph of article 71a BRRD, taking into account institutions' and entities' different business models.