Contractual Recognition Of Bail-In

Following our article¹ on the European Banking Authority's (EBA) consultation paper on the contractual recognition of bail-in, and industry responses to it, EBA has published the Final Draft Regulatory Technical Standards (RTS).²

The Final Draft RTS address a number of issues raised in the responses to the consultation but there are practical difficulties which market participants will need to deal with, unless the Level 1 text of the Bank Recovery and Resolution Directive is amended.

Some headline points are as follows:

• EBA stresses its inability to extend the exclusion to cover other liabilities such as trade finance, de minimis liabilities, standardised contracts, contingent liabilities, etc. However, there are a handful of clarifications, including, for example, on committed but undrawn facilities.