S.L. 330.9 Art. 16APower to prohibit certain distributions.

(1) Where an entity meets the combined buffer requirement when considered in addition to each of the requirements referred to in points (a), (b) and (c) of Article 141a(1) of the CRD, but it fails to meet the combined buffer requirement when considered in addition to the requirements referred to in regulations 45C and 45D, when calculated in accordance with paragraph (a) of regulation 45(2), the Resolution Committee shall have the power, in accordance with sub-regulations (2) and (3), to prohibit an entity from distributing more than the Maximum Distributable Amount related to the minimum requirement for own funds and eligible liabilities, as calculated in accordance with sub-regulation (4), through any of the following actions:

(a) make a distribution in connection with Common Equity Tier 1 capital;

(b) create an obligation to pay variable remuneration or discretionary pension benefits, or to pay variable remuneration if the obligation to pay was created at a time when the entity failed to meet the combined buffer requirement; or

(c) make payments on Additional Tier 1 instruments: Provided that, the entity shall immediately notify the Resolution Committee thereof.

(2) In the instances referred to in sub-regulation (1), the Resolution Committee, after consulting the Authority, shall without unnecessary delay assess whether to exercise the power referred to in sub-regulation (1), taking into account all of the following elements:

(a) the reason, duration and magnitude of the failure and its impact on resolvability;

(b) the development of the entity’s financial situation and the likelihood of it fulfilling, in the foreseeable future, the condition referred to in paragraph (a) of regulation 32(1);

(c) the prospect that the entity will be able to ensure compliance with the requirements referred to in sub-regulation (1) within a reasonable timeframe;

(d) where the entity is unable to replace liabilities that no longer meet the eligibility or maturity criteria laid down in Articles 72b and 72c of the CRR, or in regulations 45B or 45F(2), if that inability is idiosyncratic or is due to market-wide disturbance;

(e) whether the exercise of the power referred to in sub-regulation (1) is the most adequate and proportionate means of addressing the situation of the entity, taking into account its potential impact on both the financing conditions and resolvability of the entity concerned.

Provided that, the Resolution Committee shall repeat its assessment of whether to exercise the power referred to in sub-regulation (1) at least every month for as long as the entity continues to be in the situation referred to in sub-regulation (1).

(3) If the Resolution Committee finds that the entity is still in the situation referred to in sub-regulation (1) nine months after such situation has been notified by the entity, the Resolution Committee, after consulting the Authority, shall exercise the power referred to in sub-regulation (1), except where the Resolution Committee finds, following an assessment, that at least two of the following conditions are met:

(a) the failure is due to a serious disturbance to the functioning of financial markets which leads to broad-based financial market stress across several segments of financial markets;

(b) the disturbance referred to in paragraph (a) not only results in the increased price volatility of the own funds instruments and eligible liabilities instruments of the entity or increased costs for the entity, but also leads to a full or partial closure of markets which prevents the entity from issuing own funds instruments and eligible liabilities instruments on those markets;

(c) the market closure referred to in paragraph (b) is observed not only for the concerned entity but also for several other entities;

(d) the disturbance referred to in paragraph (a) prevents the concerned entity from issuing own funds instruments and eligible liabilities instruments sufficient to remedy the failure; or

(e) an exercise of the power referred to in sub-regulation

(1) leads to negative spill-over effects for part of the banking sector, thereby potentially undermining financial stability: Provided that, where the exception referred to in this sub-regulation applies, the Resolution Committee shall notify the Authority of its decision and shall explain its assessment in writing: Provided further that, every month, the Resolution Committee shall repeat its assessment of whether the said exception applies.

(4) The Maximum Distributable Amount related to the minimum requirement for own funds and eligible liabilities shall be calculated by multiplying the sum calculated in accordance with sub-regulation (5) by the factor determined in accordance with sub-regulation (6). The Minimum Distributable Amount related to the minimum requirement for own funds of eligible liabilities shall be reduced by any amount resulting from any of the actions referred to in sub-regulation (1)(a), (b) or (c).

(5) The sum to be multiplied in accordance with sub-regulation (4) shall consist of:

(a) any interim profits not included in Common Equity Tier 1 capital pursuant to Article 26(2) of the CRR, net of any distribution of profits or any payment resulting from the actions referred to in sub-regulation (1)(a),

(b) or (c); plus

(b) any year-end profits not included in Common Equity Tier 1 capital pursuant to Article 26(2) of the CRR, net of any distribution of profits or any payment resulting from the actions referred to in sub-regulation (1)(a),

(b) or (c); minus

(c) amounts which would be payable by tax if the items specified in paragraphs (a) and (b) were to be retained.

(6) The factor referred to in sub-regulation 4 shall be determined as follows:

(a) where the Common Equity Tier 1 capital maintained by the entity which is not used to meet any of the requirements set out in Article 92a of the CRR and in regulations 45C and 45D, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of the CRR, is within the first (that is, the lowest) quartile of the combined buffer requirement, the factor shall be 0;

(b) where the Common Equity Tier 1 capital maintained by the entity which is not used to meet any of the requirements set out in Article 92a of the CRR and in regulations 45C and 45D, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of the CRR, is within the second quartile of the combined buffer requirement, the factor shall be 0,2;

(c) where the Common Equity Tier 1 capital maintained by the entity which is not used to meet the requirements set out in Article 92a of the CRR and in regulations 45C and 45D, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of the CRR, is within the third quartile of the combined buffer requirement, the factor shall be 0,4;

(d) where the Common Equity Tier 1 capital maintained by the entity which is not used to meet the requirements set out in Article 92a of the CRR and in regulations 45C and 45D, expressed as a percentage of the total risk exposure amount calculated in accordance with Article 92(3) of the CRR, is within the fourth (that is, the highest) quartile of the combined buffer requirement, the factor shall be 0,6;

The lower and upper bounds of each quartile of the combined buffer requirement shall be calculated as follows: Lower bound of quartile = Combined buffer requirement x (Q - 1) n 4

Upper bound of quartile = Combined buffer requirement x Q n 4

where "Q " refers to the ordinal number of the quartile concerned. n