Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.5.2.3:4.5.2.3 PONV conversion power is exercised in relation to relevant capital instruments

Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.5.2.3

4.5.2.3 PONV conversion power is exercised in relation to relevant capital instruments

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

A third distinction between the PONV conversion power and the bail-in tool, is that the PONV conversion power is exercised in relation to relevant capital instruments, while the bail-in tool applies to eligible liabilities.

In BRRD II and SRMR II, the scope of the PONV conversion power is extended to include ‘eligible liabilities’ as defined in BRRD II and SRMR II.1 See section 2.5.3.2 for a discussion of this new definition under the BRRD II and SRMR II. The consequence is that the scope of liabilities that can be written down or converted under the bail-in tool will be more restricted under BRRD II and SRMR II. In addition, taking into account that the PONV conversion power should always be exercised before a resolution tool is applied, it means that the resolution authority should always write down capital instruments and eligible liabilities prior to the application of a resolution tool, whether this tool is a transfer tool or the bail-in tool. BRRD II and SRMR II provide that the scope of eligible liabilities that can be converted or written down using the PONV conversion power is more restricted when it is exercised outside of resolution.2

Deze functie is alleen te gebruiken als je bent ingelogd.