Question ID
2015_2123
Legal act
Directive 2014/59/EU (BRRD)
Topic
Interactions with the DGS and the BRRD
Article
109
Paragraph
1
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n.a.
Type of submitter
Competent authority
Subject matter
Transfer of covered deposits as a substitute to reimbursement
Question

Can resolution authorities take resolution action, e.g. a transfer of the deposit book, restoring access to covered deposits, even after such access has been interrupted and the conditions laid down in Article 2(1)(8) of Directive 2014/49/EU (DGSD) are met?


In such a case, what is the effect of such action on the obligation of the DGS under Article 8(1) DGSD (repayment obligation) and 109(1) of Directive 2014/59/EU (BRRD) (contribution in resolution)?

Background on the question

In line with Article 8(1) of Directive 2014/49/EU (DGSD) the deposit insurer shall make the repayable amount available within 7 working days (subject to interim extending 13 even to 20 working days 13 in line with Article 8(2) of Directive 2014/49/EU (DGSD)) after the relevant authority determined that covered deposits are unavailable in the meaning of Article 2(1)(8)(a) DGSD or a judicial authority made a ruling to suspend the rights of depositors to make claims against the failed entity as laid down in Article 2(1)(8)(b) DGSD.


Within the period between the determination by the relevant administrative or judicial authority and the day when DGS shall start the reimbursement of covered deposits, the resolution authority may find an acquirer interested in assuming some assets and liabilities of a credit institution in question. It would be illogical and counterproductive if, in spite of such purchase and assumption, the DGS obligation nevertheless had to repay deposits under Article 8(1) DGSD.

Submission date
Final publishing date
Final answer

Neither the BRRD nor the DGSD provide for any specific rule for this scenario.


The matter of whether and in what circumstances the resolution authority can overrule a decision of the relevant authority having determined the unavailability of deposits is not governed by EU law and it is a matter of national law. The BRRD does not empower the resolution authority to overrule the relevant authority of the DGS.

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.