- Question ID
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2022_6422
- Legal act
- Directive 2014/59/EU (BRRD)
- Topic
- Resolution financing arrangements
- Article
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103
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Delegated Regulation (EU) 2015/63 - DR on ex ante contributions to resolution financing arrangements
- Article/Paragraph
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5(1)(a)
- Type of submitter
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Resolution authority
- Subject matter
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Treatment of intragroup liabilities when one of the institutions is established in a country being a member of EEA and EFTA (i.e. non-EU Member State but EEA Member State)
- Question
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Should, according to Article 5(1)(a) of Commission Delegated Regulation (EU) 2015/63, intragroup liabilities be deducted from the contribution base when one side of the transaction is an institution established in a country being a member of the EEA and EFTA (e.g. Norway)? If so, from which date such deductions shall be applied?
- Background on the question
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This question raises a material issue, as it affects the amounts of contributions paid by individual institutions to resolution financing arrangements.
Article 5(1)(a) of Delegated Regulation (EU) 2015/63 provides for even exclusion of certain intragroup liabilities from the contribution base, provided that all the following conditions are met: (i) each institution is established in the Union; (ii) each institution is included in the same consolidated supervision in accordance with Articles 6 to 17 of Regulation (EU) No 575/2013 on a full basis and is subject to an appropriate centralized risk evaluation, measurement and control procedures; and (iii) there is no current or foreseen material practical or legal impediment to the prompt repayment of the liability when due.
The above raises a question whether exclusions indicated in Delegated Regulation 2015/63 in Article 5(1)(a) shall be indeed applied when one side of the transaction is established in a country being a Member State of the EU and the other side is established in a non-EU EEA Member State that could implement Directive 2014/59/EU (e.g. Norway).
On one hand, the condition (i) set out in Article 5(1)(a) of Delegated Regulation (EU) 2015/63 expressly refers to "institutions established in the Union". On the other hand, Directive 2014/59/EU, is a text with EEA relevance and according to EBA Q&A 2013_233 Regulation EU No 575/2013 (CRR) and Directive 2013/36/EU (CRD) are texts with EEA relevance so that the term "Member State" for the purpose of the CRR and the CRD include EEA countries as a matter of principle.
Simultaneously, due to provisions of the EEA Agreement (see in particular Article 93, 98-100, 102 and 103 of the EEA Agreement and Annex IX), incorporation of said EU regulations to Annex IX shall be made in accordance with the procedure applicable on the basis of the EEA Agreement. Some interpretative doubts may arise when one of the institutions has been established in a country being a member of the EEA and EFTA (non-EU member), in relation to the legal status of Joint Committee Decisions incorporating Directive 2014/59/EU, Regulation (EU) No 575/2013, Directive 2013/36/EU and Delegated Regulation (EU) 2015/63. The Joint Committee Decisions (JCD) concerning incorporation BRRD (No 21/2018 of 9 February 2018) and CRR (No 79/2019 of 29 March 2019) into EEA Agreement entered into force on 1 January 2020, however the entry into force of the JCD No 237/2019 of 27 September 2019 incorporating into EEA Agreement Delegated Regulation (EU) 2015/63 is still pending, i.e. Delegated Regulation (EU) 2015/63 for now (April 2022) is not part of the EEA/EFTA legal system (as it drives from the information available on the EFTA web site: https://www.efta.int/eea-lex/32015R0063.
If the above is to be taken into account it should also be decided whether the exclusions stipulated in Article 5(1)(a) of Delegated Regulation (EU) 2015/63 shall be applicable starting from:
- the contribution period following the incorporation of Delegated Regulation (EU) 2015/63 into the EEA legal system,
or
- the contribution period for which the contributions are calculated based on data from approved annual financial statements for year of the incorporation of Delegated Regulation (EU) 2015/63 into the EEA legal system (according to Article 14(1) contributions are calculated based on Year -2 data, so this approach would mean a 2 year delay in application of exclusions).
- Submission date
- Final publishing date
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- Final answer
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NB: the question was sent before the incorporation of the Delegated Regulation into Annex IX to the EEA Agreement; which this reply takes into account.
Relevant EU legal acts are made applicable in EEA EFTA States (i.e., EEA EFTA members which are not EU members) through Decisions of the EEA Joint Committee (“Joint Committee decisions” or “JCDs”) that incorporate them, with adjustments where and as appropriate, into one of the Annexes or Protocols to the EEA Agreement. For financial services, the relevant Annex to the EEA agreement is Annex IX, where the EU acquis has been incorporated.
Institutions from non-EU members of the EEA must therefore, once a given text has been incorporated into the EEA agreement, have the same or similar rights and obligations as EU institutions under this text, as part of a framework, which is (almost) identical to the EU acquis. Therefore, there is no reason to subject them to a treatment different from the one that applies to institutions located in the EU, also in light of the EBA Q&A 2013_33 according to which “Regulation EU No 575/2013 (CRR) and Directive 2013/36/EU (CRD) are texts with EEA relevance so that the term 'Member State' for the purpose of the CRR and the CRD include EEA countries as a matter of principle.” This reasoning also applies to Directive 2014/59/EU (BRRD), which is also a text with EEA relevance.
This equal treatment is however conditional on obligations similar to those provided by the EU legal text effectively applying in the country concerned. That is, the relevant JCD incorporating the EU legal text into the relevant Annex or Protocol of the EEA agreement must have been adopted and must have entered into application. Should the EU legislation not yet have been incorporated or the JCD not yet be applicable, there would be no legal basis for a specific treatment of institutions from non-EU members of the EEA.
In the case of Commission Delegated Regulation (EU) 2015/63, Decision of the EEA Joint Committee n°237/2019 of 27 September 2019 amending Annex IX (Financial services) to the EEA Agreement (https://www.efta.int/media/documents/legal-texts/eea/other-legal-documents/adopted-joint-committee-decisions/2019%20-%20English/237-2019.pdf) provided for its incorporation, among other texts and with a few adjustments stemming from the different time of entry into force, into Annex IX of the EEA Agreement. Commission Delegated Regulation (EU) 2015/63 is now reflected in section 19 ba of Annex IX to the EEA Agreement (https://www.efta.int/sites/default/files/documents/legal-texts/eea/the-eea-agreement/Annexes%20to%20the%20Agreement/annex9.pdf).
This text entered into force on 1 September 2022 (https://www.efta.int/eea-lex/32015R0063) and, as determined in Annex IX of the EEA Agreement, will start to apply as from 1 January of the year following the year of its entry into force. This means that it has been applicable since 1 January 2023.
As a result, intragroup liabilities should be deducted from the contribution base when one side of the transaction is an institution established in a country that is an EFTA member of the EEA as of the date of application of the JCD incorporating Delegated Regulation (EU) 2015/63 into Annex IX of the EEA agreement, that is, 1 January 2023, provided that in each individual case all other conditions laid down in point (a) of Article 5(1) of the Delegated Regulation are met.
The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the European Commission because it is a matter of interpretation of Union law.
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.