Recital (50)

Given the possibility to use DGS in resolution, it is necessary to further specify the conditions under which the DGS contribution can count towards compliance with the requirements to access resolution financing arrangements. That possibility should only be available for credit institutions with a total value of assets equal to or below EUR 80 billion and in the context of a resolution action primarily relying on the application of the sale of business tool or the bridge institution tool. To ensure that resolution continues to be primarily financed by the credit institution’s internal resources and to minimise distortions of competition, the use of the DGS contribution to ensure access to resolution financing arrangements should only be possible for credit institutions for which, in the preceding 24 months before resolution action is taken, the resolution plan or the group resolution plan does not provide for their winding up in an orderly manner in the event of failure, given that the MREL determined by resolution authorities for those credit institutions has been set at a level that includes both the loss absorption and the recapitalisation amounts. The MREL set by the resolution authority for credit institutions with a total value of assets on an individual basis above EUR 30 billion should comply with the minimum levels of the MREL for institutions and entities with preferred resolution strategies that envisage primarily the use of transfer tools in resolution, even if the respective resolution plan or group resolution plan had provided for different actions and the MREL of those credit institutions was therefore not subject to those minimum levels. Furthermore, the contribution of the DGS should be preceded by the contribution of own funds and eligible liabilities towards loss absorption and recapitalisation to the maximum extent possible. Finally, it should be possible for Member States to require that the institution under resolution must not have breached its MREL, including the binding intermediate targets, within a certain period preceding resolution action, without prejudice to short-term technical breaches of the MREL.