4.8.4.3 Suspension of termination rights

Termination rights of any party to a contract with a bank in resolution can be suspended from the publication of the notice of suspension until midnight – in the Member State of the resolution authority of the bank in resolution – at the end of the business day following that publication, provided that the payment and delivery obligations and the provision of collateral continue to be performed. Not only the termination rights of any party to a contract with a bank in resolution can be suspended. Also termination rights of parties to a contract with a subsidiary of such a bank can be suspended, provided that (a) the obligations under that contract are guaranteed or otherwise supported by the bank in resolution, (b) the termination rights under that contract are solely based on the insolvency or financial condition of the bank in resolution or, (c) in the case of transfer due to application of a resolution tool, either (i) all the assets and liabilities of the subsidiary relating to that contract have been or may be transferred to or assumed by the recipient or (ii) the obligations of the subsidiary are otherwise adequately protected.1 If termination rights of parties to a contract with a subsidiary of a bank are suspended, the suspension takes effect from the publication of the notice of suspension until midnight – in the Member State where the subsidiary is established – on the business day following that publication.2 Termination rights of payment and securities settlement systems or operators of these systems, central counterparties or central banks cannot be suspended.3

If termination rights are suspended, these termination rights may still be exercised, if the resolution authority sends a notice to the person concerned that the rights and liabilities covered by the contract are not transferred to another entity or are not subject to write down or conversion on the application of the bail-in tool for recapitalisation purposes.4 After the expiry of the period of suspension, the termination rights may again be exercised, provided that a resolution action is not, per se, deemed to be an enforcement event or insolvency proceedings that triggers a termination right.5

Competent authorities or resolution authorities may require a bank in resolution to maintain detailed records of financial contracts in order to be able to exercise the power to temporarily suspend termination rights.6