Institutions and entities are required to include contractual recognition of the effects of the bail-in tool in agreements or instruments creating liabilities governed by the laws of third countries, except where it is legally or otherwise impracticable to do so. However, the experience acquired in the application of the resolution framework has shown that the requirements for those contractual bail-in recognition terms, as well as the procedure for notifying and assessing the impracticability of the inclusion of such terms, are unnecessarily broad, complex and burdensome to deliver on the objective of ensuring the resolvability of institutions that might be subject to resolution action. It is therefore appropriate to narrow the scope of application of the requirement to own funds instruments and bail-inable liabilities, thereby excluding, in particular, contracts creating liabilities that might arise in the future from an uncertain event. Additionally, the scope of institutions and entities subject to the requirement should take into account the strategy envisaged in the resolution plan. For that reason, liquidation entities and subsidiaries of resolution entities that are not themselves resolution entities should not be required to include in their contracts the bail-in recognition term, unless the resolution authority requires them to do so. Finally, while the grounds for institutions and entities to invoke the impracticability of the inclusion in their contracts of the bail-in recognition term do not require adjustments, the procedure for institutions and entities to report such situations to the resolution authority should be simplified and incorporated in the annual reporting for the purposes of resolution planning.
Text as published in the Official Journal, reproduced verbatim (including any typographical quirks of the source). For the authentic version, see EUR-Lex.
