Question
Can you please clarify Article 42(6) of Directive 2014/59/EU (BRRD); regarding that the consideration can have a nominal or negative value? Does effect of this mean that the asset management vehicle (AMV) must owe a debt to the institution under resolution?
Background on the question
Article 42(6) of Directive 2014/59/EU (BRRD) provides that “When applying the asset separation tool, resolution authorities shall determine the consideration for which assets, rights and liabilities are transferred to the asset management vehicle in accordance with the principles established in Article 36 and in accordance with the Union State aid framework. This paragraph does not prevent the consideration having nominal or negative value.” We note that there is no rule about what happens with the proceeds from the sale of the AMV (except for the rule in Article 37(7)(c), that the resolution authority or any financing arrangement must pay the resolution expenses as a ‘preferred creditor’) etc. thus once a resolution authority pays any loans to the AMV (e.g. from the financing arrangement), Member States are free to keep that money, use it to repay expenses of resolution or return it to the institution under resolution or anything else they wish?
Answer
Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in theAdditional background and guidance for asking questions. We hope for your understanding.For further information please refer to thepress releaseand the updatedQ&A page.