Question
How do “Third country resolution proceedings” as defined in Article 2 (1) (88) affect a failing EU institution when these are applied to a failing third country parent?
Background on the question
“Third country resolution proceedings” in Article 2 (1) (88) of Directive 2014/59/EU (BRRD) only picks up resolution of the third country parent where it is failing, not where e.g. an EU institution is failing but the regulators act on the foreign parent. We would find it useful to understand the mechanisms surrounding this; i.e. how does the RRD machinery, including the EU resolution college and mutual recognition, to come into play? For example, where there is resolution of a third country institution to rescue an EU subsidiary, involving instruments issued under national law and would trigger termination rights everywhere. In this case in our view it would be helpful if Article 94 of Directive 2014/59/EU (BRRD) applied and such cases were discussed in the European Resolution College. But it appears that because of the narrow definition, this would not happen.
Answer
The situation you are describing in our view is accommodated by Directive 2014/59/EU (BRRD), and in such cases Article 2 (88) could be implemented broadly to capture it. The conditions for triggering resolution of the foreign third-country holding company (parent undertaking) are established by the third country law, so there is no need for the foreign third-country holding company to comply with Article 32 or Article 33 (for it to be considered to be failing) but with whatever comparable conditions with the BRRD are provided by the law in question (they could be comparable with the conditions laid down in Article 33 for holding companies). Also, Article 89(1) of Directive 2014/59/EU (BRRD) allows the matter to be discussed in European resolution colleges if the third country parent has two or more subsidiaries / significant branches in the EU. Disclaimer: This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.