Directive 2017/2399 - Amendment of Directive 2014/59/EU as regards the ranking of unsecured debt instruments in insolvency hierarchy - Main contents
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Directive (EU) 2017/2399 of the European Parliament and of the Council of 12 December 2017 amending Directive 2014/59/EU as regards the ranking of unsecured debt instruments in insolvency hierarchy| Legal instrument | Directive |
|---|---|
| Number legal act | Directive 2017/2399 |
| Original proposal | COM(2016)853  |
| CELEX number i | 32017L2399 |
| Document | 12-12-2017; Date of signature |
|---|---|
| Publication in Official Journal | 27-12-2017; OJ L 345 p. 96-101 |
| Signature | 12-12-2017 |
| Effect | 28-12-2017; Entry into force Date pub. +1 See Art 4 |
| Deadline | 29-12-2020; Review See Art 3 |
| End of validity | 31-12-9999 |
| Transposition | 29-12-2018; Adoption See Art 2.1 |
27.12.2017 |
EN |
Official Journal of the European Union |
L 345/96 |
DIRECTIVE (EU) 2017/2399 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 12 December 2017
amending Directive 2014/59/EU as regards the ranking of unsecured debt instruments in insolvency hierarchy
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Central Bank (1),
Having regard to the opinion of the European Economic and Social Committee (2),
Acting in accordance with the ordinary legislative procedure (3),
Whereas:
(1) |
On 9 November 2015, the Financial Stability Board (FSB) published the Total Loss-absorbing Capacity (TLAC) Term Sheet (‘the TLAC standard’),which was endorsed by the G20 in November 2015. The objective of the TLAC standard is to ensure that global systemically important banks (G-SIBs), referred to in the Union framework as global systemically important institutions (G-SIIs), have the loss-absorbing and recapitalisation capacity necessary to help ensure that, in and immediately following a resolution, critical functions can be continued without taxpayers’ funds (public funds) or financial stability being put at risk. In its communication of 24 November 2015 entitled ‘Towards the completion of the Banking Union’, the Commission committed itself to bringing forward, by the end of 2016, a legislative proposal that would enable the TLAC standard to be implemented into Union law by the internationally agreed deadline of 2019. |
(2) |
The implementation of the TLAC standard into Union law needs to take into account the existing institution-specific minimum requirement for own funds and eligible liabilities (MREL) applicable to all Union institutions as laid down in Directive 2014/59/EU of the European Parliament and of the Council (4). As TLAC and MREL pursue the same objective of ensuring that Union institutions have sufficient loss-absorbing and recapitalisation capacity, the two requirements should be complementary elements of a common framework. Concretely, the Commission proposed that the harmonised minimum level of the TLAC standard for G-SIIs (‘the TLAC minimum requirement’) and the eligibility criteria for liabilities used to comply with that standard should be introduced in Union law through amendments to Regulation (EU) No 575/2013 of the European Parliament and of the Council (5), while the institution-specific add-on for G-SIIs and the institution-specific requirement for non-G-SIIs as well as relevant eligibility criteria should be addressed through targeted amendments to Directive 2014/59/EU and to Regulation (EU) No 806/2014 of the European Parliament and of the Council (6). This Directive, which concerns the ranking of unsecured debt instruments in insolvency hierarchy, is complementary to the aforementioned legislative acts, as proposed to be amended, and to Directive 2013/36/EU of the European Parliament and of the Council (7). |
(3) |
In view of those proposals and in order to ensure legal certainty for markets and for entities subject to MREL and TLAC, it is important to ensure timely clarity about the eligibility criteria of liabilities used for compliance with MREL and with Union law implementing TLAC, and to introduce appropriate grandfathering provisions for the eligibility of liabilities issued before the revised eligibility criteria come into effect. |
(4) |
Member States should ensure that institutions have sufficient loss-absorbing and recapitalisation capacity to ensure smooth and fast absorption of losses and recapitalisation with a minimum impact on financial stability and while aiming to avoid an... |
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