5.2 Arrangements to ensure a smooth separation

In line with Article 67(1), point (a), of Directive 2014/59/EU, institutions should assess, when applicable, the extent to which the law of an EU Member State effectively applies to a contract ruled by third-country law and the effective application of resolution powers²² .

²² Third-country contracts underpinning the legal transfer of relevant assets, rights and/or liabilities are already expected to explicitly provide for the resolution-resilient features and to recognise and inform the counterparty that the contract may be subject to the exercise of resolution powers to suspend or restrict rights or obligations (“stay powers”) under Directive 2014/59/EU.

Institutions should assess to what extent contractual features could be amended in order to avoid notification and approvals not already exempted under Directive 2014/59/EU.

Institutions should support resolution authorities in identifying any change in the article of associations or of the legal form entailed by the transfer of the defined transfer perimeter, since an entity might not be transferrable under its current legal form to an acquirer with a different legal form or there might be conflicting provisions in the article of associations. The resolution plan should lay down the process and required actions to address these issues timely.

5.2.2 Financial aspects

When the continuity of the transfer perimeter necessitates access to currencies or continuity of back-to-back transactions as highlighted by assessment mentioned in paragraph 69 of EBA resolvability guidelines, institutions should ensure that arrangements are in place to ensure this continuity, in accordance with the resolution authority’s expectations. For instance, correspondent banking agreements could be drafted beforehand in order to ensure that the transfer perimeter continues, when necessary, to be serviced in the needed currencies. Existing agreements should also be transferrable under Directive 2014/59/EU.

Institutions should support the resolution authorities to identify the role of the solidarity mechanisms (institutions with a central body) or any existing IPS in the implementation of the transfer tool and to ensure swift separation and resolvability.

5.2.3 Operational aspects

In the case of a partial transfer either to different acquirers (such as an AMC and a BI) or to an acquirer but without winding down the institution subject to resolution (when, for instance, combining bail-in and AST), the power ruled by Article 64(1), point (d), of Directive 2014/59/EU might not be enough to maintain all the service accesses. Therefore, institutions should inform resolution authorities on the possibility to include tripartite access clauses in the contract with a service provider.

[Shared Service Company] Resolution authorities should assess whether the current service delivery model impacts the separability of the transfer perimeter and consider enforcing arrangements laid down in paragraph 34 of the EBA resolvability guidelines.

[FMI contingency plans] In addition to the guidance referred to in section 4.1.2 (and particularly paragraph 50) of the EBA resolvability guidelines, institutions should:

• - Assess how the required FMIs accesses will be transferred to the entity whose purpose is the maintenance of the critical function/core business line continuity and/or how indirect access can be established. Should the institution subject to resolution become a wind-down entity (after the application of the transfer tool in accordance with Article 37(6) Directive 2014/59/EU) or in the case of the AMC, FMI access can be limited. Therefore, indirect access via the continuing entity should be granted and arrangements should be taken for this purpose, including the continuing entity should retain the BIC, connectivity and communication services of the institution under resolution.
• - Assess the existing transition mechanisms, expedited FMI access application processes, or possibilities to grant power of attorney in order to maintain FMI access continuity for the transfer perimeter.
• - Upon request from resolution authorities, assess the impact of the transfer on the services provided by the institution to FMIs and/or other parties.