Anvendelsesområde og modtagere

For the purposes of making a determination that an institution is failing or likely to fail, in accordance with the circumstances laid down in Article 32(4)(a)-(c) of Directive 2014/59/EU, the competent authority and the resolution authority as the case may be should assess the objective elements relating to the following areas as further specified in these Guidelines:

• - the capital position of an institution;
• - the liquidity position of an institution; and
• - any other requirements for continuing authorisation (including governance arrangements and operational capacity).

The objective elements listed in these Guidelines should be carefully analysed on a comprehensive basis. The determination that an institution is failing or likely to fail should remain an expert judgement and should not be automatically derived from any of the objective elements alone. This is especially true as regards the interpretation of the elements which may be affected by factors not directly related to the financial position of the institution.

In most cases it is expected that several factors, rather than merely one, set out in these Guidelines would inform the determination that an institution is failing or likely to fail. Nevertheless, there might be situations where meeting just one condition, depending on its severity and prudential impact, would be sufficient to trigger resolution.

Without prejudice to paragraph 16, some of the objective elements included in these Guidelines, such as macro-economic developments and market indicators should always be assessed in conjunction with other factors for determining that an institution is failing or likely to fail, and framed within a comprehensive assessment of the institution. When the relevant authorities use the external indicators referred to in paragraphs 21(c)-(e) and 25(a)-(b) of these Guidelines, any determination relating to the institution failing or being likely to fail must be supported by an objective assessment of the institution’s actual financial position, to cater for the risk of market speculation and acknowledge the risk of market failures in case of a systemic crisis.

When determining whether an institution is failing or likely to fail, the competent or the resolution authority should base their determination on the assessment of the objective elements set out in Sections 2, 3 and 4 of Title II and taking into account the following, where relevant:

• a. the fact that an institution has activated its recovery plan and that the implementation of the recovery options chosen from its recovery plan have failed, in particular when the activation of the recovery plan was imposed on an institution by the competent authority as an early intervention measure under Article 27(1)(a) of Directive 2014/59/EU;
• b. a notification received by the competent authority in accordance with Article 81(1) of Directive 2014/59/EU from the management body of an institution which considers the institution to be failing or likely to fail.