AI Summary of Article 4 Simplified obligations for certain institutions
Member States must ensure competent and resolution authorities assess whether an institution’s failure would have a significant negative impact on markets, other institutions, funding conditions or the wider economy, taking into account its business nature, shareholding structure, legal form and status, risk profile, size, interconnectedness, scope and complexity of activities, membership of IPS or cooperative mutual solidarity systems and any investment services activities. Authorities shall determine the content and detail of recovery and resolution plans (Articles 5–12), the deadline for first plans and review frequency, the information to be provided by institutions (Articles 5, 11, 12 and Annex Sections A–B) and the level of detail for resolvability assessments (Articles 15–16 and Annex Section C), consulting the national macroprudential authority where appropriate.
Simplified obligations may be applied but can be withdrawn and do not limit crisis-prevention or crisis-management powers. EBA is to issue guidelines by 3 July 2015 and draft RTS by 3 July 2017 to specify assessment criteria; the Commission may adopt those RTS. Competent and resolution authorities must inform EBA of application and EBA will report by 31 December 2017 on implementation and divergences. Waivers for central-body affiliates and IPS members are permitted subject to consolidated application and IPS cooperation. Institutions under direct ECB supervision or constituting a significant share (assets >€30bn or assets/GDP >20% unless assets €5bn) require individual recovery and resolution plans. EBA shall also submit draft ITS for uniform reporting formats by 3 July 2015.
Article 4 Simplified obligations for certain institutions
1. Having regard to the impact that the failure of the institution could have, due to the nature of its business, its shareholding structure, its legal form, its risk profile, size and legal status, its interconnectedness to other institutions or to the financial system in general, the scope and the complexity of its activities, its membership of an IPS or other cooperative mutual solidarity systems as referred to in Article 113(7) of Regulation (EU) No 575/2013 and any exercise of investment services or activities as defined in point (2) of Article 4(1) of Directive 2014/65/EU, and whether its failure and subsequent winding up under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other institutions, on funding conditions, or on the wider economy, Member States shall ensure that competent and resolution authorities determine:
(a) the contents and details of recovery and resolution plans provided for in Articles 5 to 12;