S.L. 330.9 Art. 108Ranking of deposits in insolvency hierarchy.

(1)Where an institution or an entity referred to in paragraphs (b), (c) or (d) of the definition "entity" in regulation

2(1) is insolvent and is being wound up, creditors having their rights secured by pledges, privileges whether resulting from registration or granted by law, or hypothecs and covered bond investors together with counterparties of derivatives contracts that comply with Article 11 of the CBD, shall rank in accordance with the applicable laws in force in Malta at the time. Provided that the claims of covered bond investors referred to in this sub-regulation shall be limited to the full payment obligations attached to the covered bonds.

(2) Without prejudice to the provisions of sub-regulation (1), the following shall rank before the creditors listed under sub-regulation (3):

(a) covered deposits;

(b) the Depositor Compensation Scheme and the Investor Compensation Scheme:

(i) subrogating to the rights and obligations of covered depositors in insolvency;

(ii) In relation to contribution/s that are due to it by an institution or an entity referred to in paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1) under the Depositor

Compensation Scheme Regulations and the

Investor Compensation Scheme Regulations;

(c) the Resolution Fund in relation to any contribution or contributions that may be due to it by an institution or an entity referred to in paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1) in accordance with the provisions of these regulations: Provided that notwithstanding any provision to the contrary in the applicable Maltese Law, covered deposits mentioned in paragraph (a), the subrogation into the rights and obligations of covered depositors mentioned in paragraph (b)(i), the contributions due to the Depositor Compensation Scheme and the Investor Compensation Scheme mentioned in paragraph (b)(ii) and the contributions due to the Resolution Fund mentioned in paragraph (c) shall rank pari passu.

(3) Without prejudice to the provisions of sub-regulations (1) and (2), the following shall rank equally between themselves but before the ranking provided for the claims of ordinary unsecured creditors:

(a) that part of eligible deposits from natural persons and micro, small and medium-sized enterprises which exceeds the coverage level provided for in regulation

10 of the Depositor Compensation Scheme Regulations;

(b) deposits that would be eligible deposits from natural persons, micro, small and medium-sized enterprises provided they were not made through branches located outside the European Union of institutions established within the European Union.

(4) Without prejudice to the provisions of sub-regulations (1),

(2) and (3), ordinary unsecured claims shall have a higher priority ranking than that of unsecured claims resulting from debt instruments that meet the following conditions:

(a) the original contractual maturity of the debt instruments is of at least one year;

(b) the debt instruments contain no embedded derivatives and are not derivatives themselves:

Provided that debt instruments with variable interest derived from a broadly used reference rate and debt instruments not denominated in the domestic currency of the issuer, on condition that principal, repayment and interest are denominated in the same currency, shall not be considered to be debt instruments containing embedded derivatives solely because of those features;

(c) the relevant contractual documentation and, where applicable, the prospectus related to the issuance explicitly refer to the lower ranking under this sub-regulation.

(5) The following shall rank below all other unsecured creditors and shall have the following order of priority:

(a) the amount of subordinated debt that is not Additional Tier 1 or Tier 2 capital;

(b) Tier 2 instruments;

(c) Additional Tier 1 instruments;

(d) Common Equity Tier 1 instruments.

(6) For the purposes of this regulation:

(a) "debt instruments" shall mean bonds and other forms of transferable debt and instruments creating or acknowledging a debt;

(b) "derivatives" shall mean those financial instruments defined in point (44) (c) of Article 4(1) of Directive2014/65/EU; and referred to in Annex I, Section C (4) to (10) thereto.