Chapter III of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms aims to enable cross-order groups to allocate liquidity optimally when the group is in financial distress, on the basis of dedicated financial support agreements. The purpose is to set out a clear, harmonised framework, facilitate group support and enhance legal certainty despite existing legal obstacles, while maintaining adequate safeguards for financial stability, including prudential requirements and public interests such as the resolvability of the entity providing the support, as well as for the interests of the group entities concerned and their respective creditors. Articles 19 and 23 contain various requirements and conditions for group financial support agreements and the provision of support based on these agreements. Article 23 of Directive 2014/59/EU mandates the EBA to develop draft regulatory technical standards (RTS) and to issue guidelines on the various conditions for the provision of financial support that must be satisfied to permit one group entity to provide financial support to another group entity that meets the conditions for early intervention based on a support agreement in accordance with Article 19.
As one important safeguard for groups’ shareholders and creditors, Directive 2014/59/EU provides for disclosure of the general terms of a support agreement. The EBA is mandated to develop draft implementing technical standards (ITS) specifying the form and content of this disclosure. The disclosure should be made on the institution’s website and include relevant information such as the consideration and repayment modalities while respecting the need for confidentiality of more specific information.
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