Question ID
2015_2108
Legal act
Directive 2014/59/EU (BRRD)
Topic
Early intervention
Article
28
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Early intervention power to remove senior management
Question

Can the Early intervention power to remove senior management be framed in national legislation so that it can be applied even if not all other Early intervention measures have been exhausted?

Background on the question

Article 28 of Directive 2014/59/EU (BRRD) requires Member States to implement an Early intervention power consisting of the removal of senior management. Having regard to Section 2 of Article 1 of Directive 2014/59/EU (BRRD), which states that Member States may adopt or maintain rules that are stricter or additional to those laid down in the BRRD provided that they are of general application and do not conflict with the BRRD, we understand that it would be possible for national legislation to frame such a power as exceptional but without requiring to exhaust all other measures before its use.

Submission date
Final publishing date
Final answer

The sequential order between Article 27 and 28 of Directive 2014/59/EU (BRRD) stems from the legal text: The wording in Article 28 BRRD establishes that the power for the removal of senior management and management body under it is available in case of significant deterioration in the financial situation or in case of serious infringements of law, regulations, statutes of the institution or serious administrative irregularities and "if other measures taken in accordance with Article 27 are not sufficient". Therefore, the framework provides a gradual and proportionate approach depending on the seriousness of the relevant situation.

However, it may not be necessary or possible to take the measures established in Article 27 BRRD, before taking those laid down in Article 28 BRRD. It may for example even not be feasible to "take" the measure laid down in Article 27(1)(d) BRRD before exercising the power in Article 28 BRRD which is possible even if there is no 'fit and proper' issue under Directive 2013/36/EU (CRD IV) or Directive 2014/65/EU. It should also be borne in mind that the powers under Article 27(1) BRRD are not exhaustive as they complement the powers of Article 104 CRD IV and are to be taken according to the relevant situation. Therefore, it would not seem justified to have to effectively take the measures under Article 27(1) BRRD before acting under Article 28 BRRD if the conditions in Article 28 BRRD are met. The list of measures in Article 27 BRRD is to be considered a minimum list.

Disclaimer:

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.

Status
Final Q&A
Answer prepared by
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
Note to Q&A

Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Directive 2014/59/EU (BRRD) and continues to be relevant.

Disclaimer

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.