Recital (47)

To ensure sufficient flexibility and to make it easier for DGSs to intervene in support of the use of the resolution tools, where they lead to the exit from the market of the institution under resolution, certain aspects of the use of DGSs in resolution should be specified. In particular, it is necessary to specify that DGS funds can be used to support transfer transactions that include deposits, including eligible deposits above the coverage level provided by the DGS concerned, and also the non-eligible deposits included in the general depositor preference, in certain cases and under clear conditions. The contribution of a DGS should be aimed at covering the shortfall in the value of the assets transferred to a buyer or bridge institution in comparison to the value of the transferred deposits. Where a contribution is required by the buyer as part of the transaction to ensure its capital neutrality and preserve compliance with the buyer’s capital requirements, the DGS should also contribute to that effect. The support provided by a DGS to resolution action should take the form of cash or other forms, such as guarantees or loss sharing agreements that can minimise the impact of the support on the available financial means of that DGS while simultaneously allowing the contribution of the DGS to meet its purposes.