Title II - Circumstances amounting to a material threat to financial stability

When assessing whether there is a material threat to financial stability arising from or aggravated by the failure or likely failure of the institution under resolution in the context of the requirement to market the institution relating to the application of the sale of business tool, resolution authorities should consider the impact on other institutions and financial markets including infrastructure providers and non-financial institution customers. Resolution authorities should in particular consider, but not limit themselves to, factual circumstances that are relevant for the risk that marketing the institution under resolution may result in aggravating uncertainty and a loss of market confidence. These circumstances should include at least any of the following:

• (a) the risk of a systemic crisis, as evident from the number, size or significance of institutions that are at risk of meeting the conditions for early intervention or the resolution conditions or at risk of undergoing an insolvency procedure, or as evident from public financial support to institutions or extraordinary liquidity facilities provided by central banks;
• (b) the risk of a discontinuance of critical functions or a significant increase in prices for the provision of these functions as evident from changes in market conditions for these functions or their availability, or the expectation of counterparties and other market participants in this respect;
• (c) the withdrawal of short-term funding or deposits;
• (d) decreases in share prices of institutions or in prices of assets held by institutions, in particular where they can have an impact on the capital situation of institutions;
• (e) a reduction in short or medium-term funding available to institutions;
• (f) an impairment to the functioning of the interbank funding market, as particularly apparent from an increase in margin requirements and a decrease in collateral available to institutions;
• (g) increases in prices for credit default insurance or a decrease in ratings of institutions or other market participants that are relevant with respect to the financial situation of institutions.

Resolution authorities should assess the likelihood of an imminent impairment to any of these elements which could affect institutions other than the institution under resolution that are relevant with respect to the financial stability of one or more Member States based on their relevance as individuals and collectively, as appropriate.