On 22 April 2021, the European Commission adopted a Delegated Regulation supplementing the Bank Recovery and Resolution Directive (BRRD) with regard to regulatory technical standards (RTS) determining the content of the contractual terms on recognition of resolution stay powers.
Article 71a(1) BRRD provides that Member States shall require institutions and entities referred to in points (b), (c) and (d) of Article 1(1) of that Directive to include in any financial contract which they enter into and which is governed by third-country law terms by which the parties recognise that the financial contract may be subject to the exercise of powers by the resolution authority to suspend or restrict rights and obligations under Articles 33a, 69, 70 and 71 of the BRRD and recognise that they are bound by the requirements of Article 68 of the BRRD. Where an institution or entity does not include the contractual term required, that shall not prevent the resolution authority from applying the powers referred to in Articles 33a, 68, 69, 70 or 71 in relation to that financial contract.
Article 71a(5) of the BRRD requires that the European Banking Authority (EBA) develop draft RTS in order to further determine the contents of the term required in that paragraph, taking into account banks’ different business models. The EBA produced final draft RTS last December which are now set out in the Delegated Regulation that the Commission has adopted.
The Delegated Regulation enters into force on the twentieth day following its publication in the Official Journal of the EU.