Measures to prevent the failure of a credit institution through sufficiently early interventions can play an effective role in the continuum of crisis-management tools used to maintain depositor confidence and financial stability. Those measures can take various forms such as capital support measures through own–funds instruments, including Common Equity Tier 1 instruments, or other capital instruments, guarantees, or loans. DGSs have had heterogeneous recourse to those measures. To ensure the continuum of crisis-management tools and recourse to preventive measures in a manner consistent with the resolution framework and State aid rules, it is necessary to specify the timing and conditions for their application. Preventive measures should be used early to prevent deterioration of the financial situation of a credit institution. They are not appropriate once the resolution authority has taken a decision determining that the credit institution is failing or is likely to fail and that there are no measures that could prevent its failure, regardless of the assessment of whether the resolution is in the public interest or not. Designated authorities should confirm whether the conditions for such DGS intervention have been fulfilled.
Text as published in the Official Journal, reproduced verbatim (including any typographical quirks of the source). For the authentic version, see EUR-Lex.
