AI Summary of Article 45c Determination of the minimum requirement for own funds and eligible liabilities
The resolution authority, after consulting the competent authority, shall determine the requirement under Article 45(1) on the basis of specified criteria including the capacity to resolve the resolution group by applying resolution tools (including bail-in), the need for sufficient own funds and eligible liabilities for subsidiaries, the effect of excluding or transferring classes of eligible liabilities, the entity’s size, business and funding models and risk profile, and systemic interconnectedness. Where a resolution plan anticipates write-down or conversion, the requirement must ensure full loss absorption and recapitalisation to restore authorisation conditions for up to one year. Liquidation entities are generally excluded from an individual requirement unless the authority justifies a higher amount; applicable instruments to meet the requirement are own funds, eligible liabilities under Article 72a of Regulation (EU) No 575/2013 subject to specified exceptions, and liabilities in Article 45b(2).
For resolution entities the requirement is the sum of loss-absorption and recapitalisation amounts corresponding to capital and leverage requirements in Article 92(1) of Regulation (EU) No 575/2013 and Article 104a of Directive 2013/36/EU, expressed as percentages of total risk exposure amount and total exposure measure; values must use most recently reported figures and may be adjusted to sustain market confidence for up to one year, including the combined buffer requirement. EBA must develop RTS by 11 May 2027 for entities not subject to those requirements. Minimum floors apply for groups over EUR 100 billion (13.5% and 5%) and specific higher floors for certain sale/bridge strategies in groups over EUR 30 billion (15% and 4.5%). Authorities may apply the higher floors to smaller groups after assessment. Where liabilities are excluded from bail-in or transferred, the requirement must cover excluded amounts and ensure paragraph 2 conditions. Decisions imposing a requirement must state reasons, assess the elements from paragraphs 2–8 and be reviewed without undue delay; capital requirements are to be interpreted in line with competent authority application of transitional provisions of Regulation (EU) No 575/2013 and relevant national measures.
Article 45c Determination of the minimum requirement for own funds and eligible liabilities
1. The requirement referred to in Article 45(1) shall be determined by the resolution authority, after consulting the competent authority, on the basis of the following criteria:
(a) the need to ensure that the resolution group can be resolved by the application of the resolution tools to the resolution entity, including, where appropriate, the bail-in tool, in a way that meets the resolution objectives;
(b) the need to ensure, where appropriate, that the resolution entity and its subsidiaries that are institutions or entities referred to in points (b), (c) and (d) of Article 1(1) but are not resolution entities have sufficient own funds and eligible liabilities to ensure that, if the bail-in tool or write down and conversion powers, respectively, were to be applied to them, losses could be absorbed and that it is possible to restore the total capital ratio and, as applicable, the leverage ratio, of the relevant entities to a level necessary to enable them to continue to comply with the conditions for authorisation and to carry on the activities for which they are authorised under Directive 2013/36/EU or Directive 2014/65/EU;