4.4.1 The conditions for resolution

The resolution tools should be applied, if the resolution authority considers that the conditions for resolution are met.1 These conditions are (a) the determination that the bank is failing or is likely to fail has been made, (b) there is no reasonable prospect that any alternative private sector measure, supervisory action or write down or conversion of capital instruments would prevent the failure of the bank within a reasonable timeframe, and (c) a resolution action is necessary in the public interest. The resolution conditions are discussed in more detail in the following sections.

The resolution authorities should ensure that a valuation of the assets and liabilities of the bank or banking group to be put in resolution is carried out by an independent valuer to inform the determination on whether the conditions for resolution are met, and more specifically the first resolution condition.2 The EBA refers to this valuation as Valuation 1 (decision on the resolution). 3