Member States shall ensure resolution authorities have powers to apply resolution tools to institutions and to entities referred to in points (b), (c) and (d) of Article 1(1) that meet resolution conditions. Where resolution action would impose losses on creditors or convert claims, authorities shall write down and convert capital instruments and eligible liabilities under Article 59 immediately before or with the tool. The four tools are sale of business, bridge institution, asset separation and bail‑in; tools may be used singly or in combination, but asset separation only with another tool. Partial transfers via sale or bridge require orderly winding up of any residual entity within a reasonable timeframe, subject to specified exceptions and valuation safeguards.

Authorities and financing arrangements may recover reasonable expenses by deduction from consideration paid, as a preferred creditor of the institution, or from proceeds on termination of a bridge or asset management vehicle. National insolvency voidability rules must not apply to transfers effected by resolution or government stabilisation tools. Member States may confer additional compatible powers. In a systemic crisis, government stabilisation funding is available only after bail‑in absorbtion of at least 8% of total liabilities including own funds and prior Union State aid approval. EBA shall monitor preparations and report to the Commission by 11 May 2028, covering bail‑in arrangements, operationalisation of other tools and transparency.