Question ID
2015_1793
Legal act
Directive 2014/59/EU (BRRD)
Topic
Interactions with the CRR / CRD IV and the BRRD
Article
4
Paragraph
1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Differences between proportionality in the CRD IV and Simplified obligations in the BRRD.
Question

In accordance with the Directive 2014/59/EU (BRRD), Article 74(4) of CRD IV will expire when BRRD is implemented. Is the proportionality in the CRD IV different from the simplified obligations in the BRRD?

Background on the question

The Member State which has raised the question has implemented Article 74(4) of the CRD IV in a way where it requires all institutions to make a recovery plan. But, after consulting the macro prudential authority the Member State which has in accordance with Article 74(4) modified the requirement in a supplementary law. In this law the Member State establishes that institutions with a balance sheet below EUR 134.4 million (conversion rate of 01/06/2015) are not required to make a recovery plan. For the small banks the Member State considers that their capital contingency plan is sufficient. For small investment firms the Member State considers that they will be handled in accordance with the normal insolvency as they are not taking deposits or providing loans. Can this proportionality be continued when Article 74(4) in the CRD IV is replaced by the BRRD?

Submission date
Final publishing date
Final answer

Outright waivers for individual institutions from the obligation to prepare recovery plans are only available in the circumstances outlined in Article 4(8) of Directive 2014/59/EU (BRRD).                                                                             

It may also be worth noting that pursuant to Article 1(1)(a) and definitions in Article 2 (1) (3) and Article 2(23) of the BRRD, small investment firms, i.e. with an initial capital below 730.000 Euro fall outside the scope of the BRRD and, therefore, they are excluded from recovery and resolution planning obligations.

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.