22 Amendments of Othmar KARAS related to 2023/0112(COD)

Proposal for a directive
Recital 12

(12) To ensure that the resolution objectives are attained in the most effective way, the outcome of the public interest assessment should be negative ~~only~~ where the winding up of the failing institution or entity under normal insolvency proceedings would achieve the resolution objectives ~~more effectively and not only~~ to the same extent as resolution.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 38

(38) The ranking of all deposits should be fully harmonised through the implementation of a general depositor preference with a single-tiered approach, whereby all deposits benefit from a higher priority ranking over ordinary unsecured claims, without any differentiation between different types of deposits. At the same time, the use of the deposit guarantee schemes in resolution, insolvency and in preventive measures should always remain subject to compliance with the relevant conditionality, in particular the so-called ‘least cost test’.

2023/11/06
Committee: ECON

Proposal for a directive
Recital 39

(39) A general depositor preference will contribute to reinforcing depositors’ confidence and to further prevent the risk of bank runs. Enhanced depositor protection is also aligned with the central role deposits play in the real economy, being the primary tool for savings and for payments, as well as in the banking activity, where the deposits represent an important source of funding and are a key driver of confidence in the banking system, which becomes of particular relevance in times of market stress. Moreover, a general depositor preference improves the resolvability of institutions and entities by increasing their ability to comply with the requirements to access the resolution financing arrangements and decreasing the amount of funding required from those arrangements, due to the lower risk of breaching the ‘no creditor worse off’ principle where bailing-in ordinary unsecured debt. In particular, the removal of deposits from the insolvency class of ordinary unsecured claims would increase the bail- inability of remaining ordinary unsecured claims by minimising the risk of breaches of the ‘no creditor worse off’ principle. By reducing the likelihood of deposits being written down or converted to ensure access to the resolution financing arrangements, the general depositor preference would contribute to making the bail-in tool more effective and credible and would lead to an increase of the transparency and legal certainty of the resolution framework. The general depositor preference would also contribute to the credibility of transfer strategies in resolution, as it would facilitate the inclusion of the entire deposit contract in the perimeter of liabilities to be transferred to a private purchaser or to a bridge institution, to the benefit of the customer relationship and the franchise value of the institution under resolution. Lastly, a full harmonisation of the insolvency ranking of depositors would be beneficial from the cross-border and level playing field perspective.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 40

(40) A single-tiered approach for the priority ranking of deposits under national laws governing normal insolvency proceedings contributes to a more efficient and less costly protection of all deposits. For covered deposits, that approach facilitates the financing by the DGS of measures other than the payout of covered deposits, which can be more effective and less disruptive in protecting access to the deposited funds as they do not lead to an interruption of access to bank accounts and payment services. For the deposits that are not covered, that approach facilitates their protection where necessary for the protection of financial stability and depositor confidence. Finally, by introducing flexibility in the use of those potentially less costly mechanisms for depositor protection, that approach minimises the immediate disbursement needs of the DGSs, thereby ensuring a better preservation of their available financing means in case other crises occur and decreasing the burden on the banking sector, who are called to replenish those funds.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Recital 41

(41) The changes to the priority ranking of deposits, in particular the elimination of the higher ranking of covered deposits and the claims of the DGSs relative to all other deposits, would not negatively affect the protection afforded to covered deposits in the event of failure, as that protection would continue to be guaranteed through the mandatory exclusion of covered deposits from loss absorption in case of resolution and, ultimately, by the payout provided by the DGS in event of unavailability of deposits.deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 1 – point b

Directive 2014/59/EU
Article 2 – paragraph 1 – point 35

(35) ‘critical functions’ means activities, services or operations the discontinuance of which is likely in one or more Member States to lead to the disruption of services that are essential to the real economy or to disrupt financial stability at national ~~or reg~~level, or where the disruption of services at regional level implies a material risk of a systemic crisis at national level, due to the size, market share, external and internal interconnectedness, complexity or cross- border activities of an institution or group, with particular regard to the substitutability of those activities, services or operations;;

2023/11/06
Committee: ECON

Othmar KARAS

Proposal for a directive
Article 1 – paragraph 1 – point 1 – point b

Directive 2014/59/EU
Article 2 – paragraph 1 – point 35

(35) ‘critical functions’ means activities, services or operations the discontinuance of which is likely in one or more Member States to lead to the disruption of services that are essential to the real economy or to disrupt financial stability at Unational or ~~reg~~national level, due to the size, market share, external and internal interconnectedness, complexity or cross- border activities of an institution or group, with particular regard to the substitutability of those activities, services or operations;;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 15

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 1 – introductory part

CWithout legal effect to any alternative private sector measure, including measures by an IPS, that would prevent the failure or the likely failure of the institution within a reasonable timeframe, competent authorities shall notify resolution authorities as early as possible where they consider that there is a material risk that ~~one or more of the circumstances in~~an institution will fail according to Article 32(4) would apply in relation to an institution or an entity referred to Article 1(1), points (b), (c) or (d). That notification shall contain:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 15

Directive 2014/59/EU
Article 30 a – paragraph 2 – subparagraph 1 – point b

(b) an non-binding and non-exhaustive overview of the measures which would prevent the failure of the institution or entity within a reasonable timeframe, their expected impact on the institution or entity as regards the circumstances referred to in Article 32(4) and the expected timeframe for the implementation of those measures.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 15

4. TSubject to alternative private sector measures, including measures by an IPS, that would prevent the failure or the likely failure of the institution within a reasonable timeframe, the powers of resolution authorities shall include the power to market to potential purchasers, or make arrangements for such marketing, the institution or entity referred to in Article 1(1), points (b), (c) or (d), to potential purchasers, or require the institution or entity to do so, for the following purposes:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point a

Directive 2014/59/EU
Article 32 – paragraph 1 – point b

(b) having regard to the timing~~, the need to implement effectively the resolution strategy and other relevant circumstances, there is~~ and other relevant circumstances, there is, notwithstanding point (a) of this paragraph, no reasonable prospect that any alternative private sector measure including measures by an IPS, supervisory action, early intervention measures, or write down or conversion of relevant capital instruments and eligible liabilities as referred to in Article 59(2) taken in respect of the institution would prevent the failure of the institution within a reasonable timeframe;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point a

Directive 2014/59/EU
Article 32 – paragraph 2 – subparagraph 3 a (new)

The assessment of the conditions referred to in paragraph 1, points (a) and (b), shall only be made by the relevant authority after having consulted an IPS of which the institution is a member.

2023/11/06
Committee: ECON

Othmar KARAS

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – paragraph 5 – subparagraph 1

For the purposes of paragraph 1, point (c), for entities that are subject to simplified obligations in relation to recovery and resolution planning in accordance with Article 4, a resolution action shall not be treated as in the public interest, unless the resolution authority determines that its failure and subsequent winding up under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other institutions, on funding conditions, or on the wider economy. For entities that are not subject subject to simplified obligations in relation to recovery and resolution planning in accordance with Article 4, a resolution action shall be treated as in the public interest where that resolution action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Article 31 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives more effectively.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – paragraph 5 – subparagraph 1

For the purposes of paragraph 1, point (c), a resolution action shall be treated as in the public interest where that resolution action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives referred to in Article 31 and where winding up of the institution under normal insolvency proceedings would not meet those resolution objectives ~~more effectively~~to the same extent.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – paragraph 5 – subparagraph 2

Member States shall ensure that when carrying out the assessment referred to in the first subparagraph, the resolution authority, based on the information available to it at the time of that assessment, considers and compares all extraordinary public financial support that can reasonably be expected to be granted to the institution, both in the event of resolution and in the event of winding up in accordance with the applicable national law.;deleted

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17 – point c

Directive 2014/59/EU
Article 32 – paragraph 5 – subparagraph 2 a (new)

An institution’s membership in an IPS shall, in general, be considered as a sufficient guarantee of the resolution objectives referred to in Article 31.

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 19

Directive 2014/59/EU
Article 32c – paragraph 1 – point b

(b) where ~~the extraordinary public financial support takes the form of~~ an intervention by a deposit guarantee scheme to preserve the financial soundness and long-term viability of the credit institution ~~in compliance with the conditions set out in Articles 11a and 11b of Directive 2014/49/EU, provided that none of the circumstances referred to in Article 32(4) are present;~~constitutes extraordinary public financial support in compliance with the conditions set out in Directive 2014/49/EU:

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 19

Directive 2014/59/EU
Article 32c – paragraph 1 – point b a (new)

(b a) subject to the cases referred to under point (bb), none of the circumstances referred to in Article 32(4) are present;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 19

Directive 2014/59/EU
Article 32c – paragraph 1 – point b b (new)

(b b) in case of a deposit guarantee scheme which is acknowledged as IPS, the resolution authority has not taken any resolution action under Article 32;

2023/11/06
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 45

Directive 2014/59/EU
Article 74 – paragraph 3 – point d

(d) when determining the losses that the deposit guarantee scheme, where it does not qualify as an institutional protection scheme, would have incurred had the institution been wound up under normal insolvency proceedings, apply the criteria and methodology referred to in Article 11e of Directive 2014/49/EU and in any delegated act adopted pursuant to that Article.;

2023/11/06
Committee: ECON