- Question ID
-
2017_3211
- Legal act
- Directive 2014/59/EU (BRRD)
- Topic
- MREL
- Article
-
47, 48
- Paragraph
-
1
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
-
n.a.
- Type of submitter
-
Competent authority
- Subject matter
-
Sequence of write down of shares and subordinated debt
- Question
-
When applying the bail-in tool, (but not the Point of Non-Viability write-down), is it necessary to act on all ”shares” before touching upon ”subordinated debt”?
- Background on the question
-
It seems as if an extra step is implied in Article 48(1) of Directive 2014/59/EU (BRRD) between (c) and (d), to capture all other classes of shares that are not Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (AT2) capital. Article 48(1)(d) of Directive 2014/59/EU (BRRD) assumes that all ”shares”’ have been addressed, but they are not expressly picked up in that list. It has to be noted that Article 47(1) (a) refers to ”cancel[ing] existing shares”, which suggests all shares and not just CET1. Some shares however may not be capital instruments so we do not think they should be cancelled at the Point of Non Viability (PONV) but rather left for bail in.
- Submission date
- Rejected publishing date
-
- Rationale for rejection
-
Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.
If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.
For further information please refer to the press release and the updated Q&A page.
- Status
-
Rejected question