On October 1, 2014, the EBA published for consultation draft guidelines on the treatment of liabilities in bail-in under the BRRD. The BRRD provides the sequence for application of the power to write down or convert liabilities in resolution, specifying that capital instruments (as defined under the CRR) should bear losses first, before other liabilities. The EBA is tasked with issuing guidelines that clarify the interrelationship between these provisions of the BRRD and the hierarchy of capital instruments in the CRR and CRD IV. The proposed guidelines aim to eliminate ambiguity about which category of write down sequence a particular instrument belongs to. Responses to the consultation are due by January 3, 2015. The EBA will be consulting on other aspects of the bail-in regime later this year.
The consultation paper is available at: http://www.eba.europa.eu/documents/10180/833064/EBA-CP-2014-29+%28CP+on+GL+on+Interrelationship+BRRD+and+CRR-CRD%29.pdf .
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