S.L. 330.9 Art. 46Assessment of amount of bail-in.

(1) When applying the bail-in tool, the Resolution Committee shall assess, on the basis of a valuation that complies with regulation 36, the aggregate of:

(a) where relevant, the amount by which bail-inable liabilities must be written down in order to ensure that the net asset value of the institution under resolution is equal to zero; and

(b) where relevant, the amount by which bail-inable liabilities must be converted into shares or other types of capital instruments in order to restore the Common Equity Tier 1 capital ratio of either:

(i) the institution under resolution; or

(ii) the bridge institution.

(2) The assessment referred to in sub-regulation (1) shall establish the amount by which bail-inable liabilities need to be written down or converted in order to restore the Common Equity Tier 1 capital ratio of the institution under resolution or where applicable establish the ratio of the bridge institution taking into account any contribution of capital by the resolution financing arrangement pursuant to regulation 101(1)(d), and to sustain sufficient market confidence in the institution under resolution or the bridge institution and enable it to continue to meet, for at least one year, the licence conditions and to continue to carry out the activities for which it is authorised under the CRD or Directive 2014/65/EU:

Provided that, where the Resolution Committee intends to use the asset separation tool referred to in regulation 42, the amount by which bail-inable liabilities need to be reduced shall take into account a prudent estimate of the capital needs of the asset management vehicle as appropriate.

(3) Where capital has been written down in accordance with regulations 59 to 62 and bail-in has been applied pursuant to regulation 43(2) and the level of write-down based on the preliminary valuation according to regulation 36 is found to exceed requirements when assessed against the definitive valuation according to regulation 36(10), a write-up mechanism may be applied to reimburse creditors and then shareholders to the extent necessary.

(4) The Resolution Committee shall establish and maintain arrangements to ensure that the assessment and valuation is based on information about the assets and liabilities of the institution under resolution that is as up to date and as comprehensive as is reasonably possible.