38. In order to (i) avoid unnecessary financial disturbances and to ensure reliability of financial …

In order to (i) avoid unnecessary financial disturbances and to ensure reliability of financial services provided by the transfer perimeter or (ii) limit the funding instabilities of the activities to be continued (including under the AST for the legacy entity), the core transfer perimeter should, when possible and subject to paragraph 41 of these guidelines, be transferred with the connected financial obligations and protections. Therefore, in the resolution planning, institutions with transfer strategies included in their resolution plans should:

• - identify financial linkages between off- and on balance sheet exposures and liabilities and, in particular, guarantees (including, where relevant, references to: scope¹¹ ; duration; early termination rights; change of control or cross-default clauses; or applicable law) given and received distinguishing external guarantees and intra-group guarantees. Intragroup guarantees¹² should be particularly assessed in order to evaluate whether they should be transferred or cancelled without causing unwanted havoc;
• - identify existing hedges not already captured by the safeguards referred to above;
• - identify the organizational units that are responsible for the provision of funding and their contractual interlinkages with other units, taking into account cash in- and outflows and counterbalancing capacity;
• - develop, when necessary, arrangements ensuring the maintenance of existing agreements in and post resolution, the continuity of back-to-back transactions of the separated units, the access to currencies by the separated units.

Legal Interconnections

¹¹ Such as, for instance, letters of comfort.

¹² Intragroup guarantees, in the context of these guidelines, are to be broadly understood as loss transfer mechanisms.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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