We would like clarification on the applicable framework for public recapitalisation which is not classified as precautionary recapitalisation accordingly to Article 32(4)(d)(iii) of Directive 2014/59/EU (BRRD), in particular i) its relation to Government Financial Stabilisation Tools, and ii) differences in rules applicable in 2015 and from 2016 onwards.
It is clarified in Directive 2014/59/EU (BRRD) that in the cases of the points mentioned in points (d) (i), (ii) and (iii) or Article 32(4) that measures shall be of a precautionary and temporary nature.
As of 2015 the Directive 2014/59/EU (BRRD) is applicable except for provisions in Section 5 of Chapter IV of Title IV, which shall apply at the latest by 1 January 2016. The Government financial stabilisation tool, but also the equity support tool and the temporary public ownership (GFST), as well as the provisions on bail-in are within that Section. Member States may decide to anticipate the transposition of those tools.
From the moment the provisions of Section 5 of Chapter IV of Title IV are applicable (2015 or, when a Member State exercises the option foreseen in subparagraph 3 of Article 130(1), at the latest by 1 January 2016), public recapitalisation which is not classified as precautionary recapitalization must comply with the provisions related to GFST.
Even if the option foreseen in subparagraph 3 of Article 130(1) is exercised and the above mentioned provisions are not in force, Article 32 is still applicable. Thus, any recapitalisation that is not classified as precautionary recapitalisation would trigger the failing or likely to fail condition, as described in Article 32(4).
This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.