On February 13, 2023, the European Banking Authority (EBA) issued its Guidelines to resolution authorities on the publication of the write-down and conversion and bail-in exchange mechanic (EBA/GL/2023/01).
This document has been prepared to implement the European Banking Authority Guidelines to resolution authorities on the publication of the write-down and conversion and bail-in exchange mechanic (EBA/GL/2023/01). These guidelines specify the information that resolution authorities must make public regarding the application of write-downs and conversions, particularly in relation to the Bail-in tool.
This document outlines how Latvijas Banka, as the national resolution authority (NRA), could apply the Bail-in tool when resolving a credit institution on its own or executing a resolution scheme approved by the Single Resolution Board (SRB). In cases pertaining to the resolution of banks under the SRB's remit, the SRB initiates the individual steps in the implementation of the Bail-in tool as part of the operationalisation of the tool in accordance with the SRB procedures.
Given the substantial complexity and time constraints involved in an actual resolution, Latvijas Banka may deviate from the procedures outlined here as necessary in specific cases. Additionally, processes may evolve, and this document should be regarded as a living document open to updates.
Identification of the stakeholders involved
|
Internal stakeholders |
Key responsibilities |
|
National Resolution Authority (NRA) |
|
|
Chosen independent valuer |
|
|
Central depository – Nasdaq CSD |
Executing the following Bail-in orders:
|
|
FMI – Stock exchange – Nasdaq Baltic Stock exchange |
Executing the following Bail-in orders:
Lifting the trading and settlement suspension |
Phases in the application of the Bail-in tool
|
Commencing the resolution proceedings |
Notes |
|
The NRA issues a resolution decision on commencing the resolution proceedings. |
The resolution proceedings are commenced upon establishing that the relevant conditions have been met. |
The specific details of applying the Bail-in tool for the resolution of an institution under the NRA's remit are as follows:
- the decisions on commencing the resolution proceedings and applying the resolution tools may be handled separately. The period between these two decisions (labelled the resolution weekend) could be used by the NRA to prepare the institution and other affected authorities and persons with the objective that the decision on the resolution tool(s), in this case the Bail-in tool, could be swiftly implemented and the institution could continue its operations as soon as possible. The relevant preparatory activities are as follows:
- identifying the stakeholders involved;
- collecting the necessary specific information needed for the application of the Bail-in tool;
- finalising the process by appointing an external advisor or updating the contract, if needed;
- postponing any pending public announcements arising from the requirements of the Market Abuse Regulation, Prospectus Regulation, or any national market transparency requirements.
- During the resolution weekend, the resolution is imposed on the institution. Once resolution proceedings have already commenced, the NRA applies its resolution powers in full.
|
Collecting and updating the information necessary for the write-down and conversion of capital instruments (WDCCI) and Bail-in |
Notes |
|
The NRA asks the institution to provide the data included in its management information systems (MIS) (upload into a virtual data room (VDR)). This step has already been initiated in the Valuation 1 and Valuation 2 processes. |
Instruments / liabilities within the scope:
Main information:
|
|
Determining the scope of the instruments subject to a freeze |
Notes |
|
1. The NRA identifies the instruments and liabilities that might be included in WDCCI and Bail-in through:
2. The NRA checks if the instruments/liabilities are not statutorily excluded from Bail-in. |
Determine the scope of the relevant capital instruments and bail-inable liabilities subject to a freeze. |
|
Imposing resolution administration and a freeze |
Notes |
|
1. The NRA checks if the conditions for individual suspensions under a freeze are met. 2. The NRA prepares decisions on individual suspensions:
3. The NRA issues and publishes a decision on the individual suspensions. 4. To execute the suspensions and restrictions, the NRA instructs Nasdaq Central Securities Depository (CSD) /Foreign CSD to change the entry and reflect the provisions included in the decision, and the latter instructs the Stock Exchange to suspend trading. 5. The NRA extends the freeze for up to two business days if necessary. |
Regarding Point 5, use the relevant information obtained during the data collection (e.g. if the instruments are traded, on which markets). The extension option referred to in Point 5 shall be considered for suspensions that are nearing the end of their time frames – mainly for suspensions under Sections 91, 92, and 93 of the Law. |
Some of the relevant activities in this phase, enumerated below, are already covered in the preparatory period:
- the NRA checks if the 3 conditions for resolution are met;
- the NRA decides on appointing a special manager.
|
Determining the perimeter of WDCCI and Bail-in based on Valuation 2 (provisional or definitive) |
Notes |
|
1A. If Valuation 2 results in a negative net asset value (NAV) or 0, the NRA identifies the losses to be absorbed by the reduction and write-down of CET1 items, relevant capital instruments and bail-inable liabilities available for reduction and write-down. 1B. If Valuation 2 results in a positive NAV, but the institution is undercapitalised, the NRA identifies the bail-inable liabilities for full or partial conversion and the amount needed to recapitalise the institution. 2. The NRA identifies the positions of the relevant capital instruments and bail-inable liabilities in hierarchy in accordance with the Credit Institutions Law or the Law on Investment Firms. 3. The NRA checks if the instruments/liabilities are not statutorily excluded from Bail-in. 4. The NRA determines the extent of the reduction and write-down, given any discretionary exclusions. 5. The NRA, in consultation with the competent authority, adjusts the level of the required recapitalisation), identifies the amounts of the relevant capital instruments and bail-inable liabilities available for conversion, and determines the extent of conversion (incl. conversion rates). |
The relevant capital instruments and bail-inable liabilities. The shares belonging to unknown shareholders are registered to a holder account and handed over, once the owners become known. |
|
Initiating the issue of new shares (special manager appointed) |
Notes |
|
1. The special manager follows the procedures described in the Bail-in Playbook and initiates internal steps for the adoption of a decision on the changes to the registered capital. 2. The NRA communicates the intention to issue new shares to the Commercial Register. 3. The national competent authority assesses and the ECB approves the qualifying holding, if acquired. |
The effective day of issue is aligned with the resolution date in the decision on WDCCI and Bail-in. |
|
Procedures in the post-resolution period |
Notes |
|
1. The NRA requests the development of a business reorganisation plan (BRP) (only in the case of an open Bail-in). 2. Dealing with shares belonging to unknown shareholders. |
The BRP to be provided within one month of application of the Bail-in tool (with a possible extension of up to 2 months). The shares belonging to unknown shareholders are registered to a holder account and handed over, once the owners become known. |
Definition of the perimeter of WDCCI when applying the Bail-in tool
In accordance with Section 77(3) of the Law (Article 59(3) of the BRRD), there are three conditions under which the write-down and conversion of eligible instruments may be exercised:
- the institution meets the conditions for the application of resolution tools, as specified in Section 39 of the Law (Article 32 of the BRRD), before any resolution action is taken;
- Latvijas Banka has concluded that if the write-down and conversion of eligible instruments is not executed, the respective institution will no longer be viable, or such a conclusion has been made by the NRA based on its own information;
- the institution requires State aid, except where it is provided in the form of precautionary aid measures specified in Section 39(3)(4)(c) of the Law (Article 32(4)(d)(iii) of the BRRD).
A distinction should be made between the following:
- WDCCI(EL) executed pursuant to Section 77(1)(1) of the Law independently of the resolution proceedings (Article 59(1)(a) of the BRRD);
- WDCCI(EL) executed pursuant to Section 77 (1)(2) of the Law as part of the resolution proceedings (Article 59(1)(b) of the BRRD).
After entry into resolution, the NRA exercises WDCCI as part of the resolution proceedings, pursuant to Section 77 of the Law (Article 59 of the BRRD), before or concurrently with the application of any resolution tools. The reduction of CET1 items in order to absorb losses precedes the write-down or conversion of the relevant capital instruments.
Performance of WDCCI before the application of the resolution tools is aimed primarily at the absorption of losses and even partial recapitalisation if the relevant capital instruments suffice. If they ensure that the institution is fully recapitalised and the resolution objectives are achieved, the resolution tools do not have to be subsequently applied. However, if the conversion of the relevant capital instruments cannot ensure recapitalisation to the previous level, a combination with other resolution tools and measures should be pursued.
When determining the aggregate amount necessary to be written down or converted in the case of a resolution of an institution under the NRA's remit, the following considerations must be taken into account.
- The available results of Valuation 2:
- the Valuation 2 report, prepared in accordance with Section VIII of the Law, provides the NRA with information on the perimeter of WDCCI and Bail-in (where it is based on a resolution strategy, including the Bail-in tool), as well as an estimate of the aggregate amount of losses that need to be covered, type and number of instruments that need to be converted to ensure the recapitalisation, the conversion rates, and a preliminary assessment of the No Creditor Worse Off (NCWO) principle.
- The hierarchy to be followed when performing WDCCI and Bail-in:
- the hierarchy that should be followed when exercising WDCCI and the Bail-in is based on the preference of the relevant instruments, which corresponds to the insolvency hierarchy;
- basic hierarchy should comply with the Credit Institutions Law or the Law on Investment Firms, the exact positioning of the instruments could be detectable from the Valuation 2 report.
The hierarchy to be considered for the application of WDCCI and Bail-in includes the following items (the specifics of the instruments and liabilities have to be considered as some of them might need to be excluded):
|
Classification of instruments |
Legal basis |
||
|
CET 1 items |
Articles 28 (1) to (4), Articles 29 (1) to (5) or Article 31 (1) of the CRR |
||
|
Eligible instruments |
Relevant capital instruments |
AT1 instrument |
Article 52 of the CRR |
|
T2 instrument |
Article 63 of the CRR |
||
|
WDCCI Eligible Liabilities (EL) |
Liabilities fulfilling the conditions stated in Section 591(1)-(5) or 591 (6)(1,2) (in case of internal MREL) of the Law (Article 45b or Article 45f(2)(a) (for internal MREL purpose) of the BRRD), including liabilities that do not meet the requirement for residual maturity under Article 72c (1) of the CRR. |
||
|
Liabilities eligible for Bail-in |
Section 54 of the Law (Article 44 of the BRRD) |
||
- The amount of losses to be absorbed and the determined parameters of the write-down if Valuation 2 results in a negative net asset value (NAV) or 0:
- losses comprise all those incurred and not covered;
- the amount is based on the results of Valuation 2;
- the hierarchy in accordance with the Credit Institution Law or the Law on Investment Firms. If CET1 items are insufficient to cover the loss, the NRA determines the full write-down for each class of the relevant capital instruments and full or partial write-down of the bail-inable liabilities by comparing the amount of the remaining losses and the outstanding amount (including accrued interest) of a given class of bail-inable liabilities;
- the extent of the write-down of the relevant capital instruments and bail-inable liabilities should cover the loss to increase NAV of the institution to 0;
- if the losses are high, the NRA should use funds from the Deposit Guarantee Fund in accordance with Section 127 of the Law, ensuring that the deposits remain accessible to their owners (i.e. the covered deposits are excluded from the process of the write-down and conversion).
- the amount of losses to be absorbed and the determined parameters of the write-down if Valuation 2 results in a positive NAV, but the institution is undercapitalised:
- as described in Point 3, losses comprise all those incurred and not covered and are based on the results of Valuation 2;
- if the determined NAV is positive (greater than 0), the impact is as follows:
- the shareholders face significant dilution of their holdings as new equity is issued;
- the creditors (the owners of bail-inable liabilities) whose debt is converted into equity might also suffer losses while gaining equity stakes in the restructured bank;
- the hierarchy should be followed in accordance with the Credit Institution Law or the Law on Investment Firms. As the CET1 items are sufficient to cover the loss, the NRA determines the partial write-down for each class of the relevant capital instruments and full or partial conversion of the bail-inable liabilities needed to recapitalise the institution.
Identification of financial instrument holders (owners)
All instruments to be written down or converted should be identified, including their ISIN, registration location (Nasdaq CSD or foreign depository), and their position in the hierarchy according to the Credit Institution Law and the Law on Investment Firms.
The scope will be based on the information provided by the institution, as defined in the Bail-in Playbook, included in the MIS and VDR and communicated to the independent valuer providing the Valuation 2 report. This information is also necessary for defining the instruments subject to a freeze.
The scope of WDCCI following the reduction of CET1 items follows the hierarchy specified in the Credit Institution Law or the Law on Investment Firms and includes relevant capital instruments:
- AT1 instruments;
- T2 instruments.
Where the amount of such instruments is perceived to be insufficient to absorb the losses of the institution and recapitalise it to the required level, application of the Bail-in tool is the preferred strategy, the scope of which is to be determined.
The scope of Bail-in does not include any statutory exclusions made on a legal basis. It includes only the bail-inable liabilities, from which the NRA may exclude certain liabilities (the so-called discretionary exclusion) if justified in accordance with Section 54 (4) of the Law.
Determination of record date
The record date is the specific date on which Nasdaq CSD (CSD) captures a snapshot of its books to identify the legal owners who will be affected by the Bail-in.
The NRA sets the record date, considering the standard settlement cycles (T+2 or T+3) to manage the trades in process. The record date is announced to stakeholders to prevent market confusion and ensure that all affected parties understand the bail-in process.
Conclusions based on the analysis regarding the application of the NCWO principle (Impact assessment and discretionary exemptions)
In accordance with the principle of fair treatment of creditors, the so-called NCWO principle, the respective creditors of the institution should not suffer greater losses in the resolution process (in particular the application of the Bail-in tool) than in regular insolvency proceedings. Since some of the acceptable obligations fall in the same or higher preferential order with obligations excluded from the application of the powers of WDCCI(EL), in accordance with Section 53 and 54 of the Law, the NRA shall compare the Bail-in recovery rates for each class of shareholders and creditors with the preliminary hypothetical recovery rates in insolvency proceedings, as provided in Valuation 2. It shall reach a conclusion based on the analysis of the application of the principle of fair treatment of creditors, in relation to the requirements of the applicable legal framework, thus ensuring compliance with the principle of fair treatment of creditors.
Finalising the list of affected creditors
Finalising the list of the affected creditors involves verifying and documenting all entities and/or legal persons holding capital instruments and/or bail-inable liabilities that are subject to resolution measures. This comprehensive list ensures transparency and accuracy in determining which creditors shall bear losses or be transformed into equity holders as a result of the resolution process.
Exclusion of certain liabilities
Statutory exclusions are described in Section 54 (1) of the Law (Article 44(2) of the BRRD). Discretionary exclusions follow Section 54 (4) of the Law and are only applied under four specific conditions. EBA/Op/2015/07 describes the conditions under which the discretionary exclusions might be exercised in greater detail and provides practical examples of items that should be considered.
Suspension of trading and settlement
For the NRA to be able to effectively determine the scope of the freeze, the degree in which the CET1 instruments, relevant capital instruments, and bail-inable liabilities to be written down or converted must be considered. When deciding on the scope, the following objectives shall be taken into account:
- the ability to postpone the decision-making on the specifics of the resolution scheme, and/or
- the possibility to retain a stable structure of the above-mentioned instruments and liabilities (e.g. when waiting for the definitive version of Valuation 2) and prevent financial instability (affecting the market value of the instruments by including them in the scope of the freeze) while preparing for the execution of the decision.
Legal basis for the suspension
The suspension of trading, also known as a freeze, is based on the following grounds:
i) Section 86 (1) 3) and 4) of the Law – Suspension of trading.
Pursuant to Section 86(1) 3) of the Law, the NRA may, within its additional powers, require the Stock Exchange to suspend trading in the identified instruments on the regulated market. Further, specifically for the purposes of exercising the write-down and conversion, the NRA may apply the powers under Section 74 (2) of the Law and request the removal of the respective instruments from trading. The NRAs powers are directly applied as stipulated in Section 86 (1) 4) of the Law according to which the NRA instructs the Stock Exchange/ Foreign Central Depository to execute such measures and requests its cooperation. This instruction should also be delivered to Nasdaq CSD under the same legal provisions and with the same content. In terms of the time frame, the decision on suspension is adopted either concurrently with or following the decision on commencing the resolution proceedings.
ii) Section 91 of the Law – Suspension of certain obligations.
Pursuant to Section 91 of the Law, the NRA is entitled to suspend certain obligations.
The suspension under Section 91 of the Law goes on from the time of publication of the decision until the end of the following working day (midnight).
iii) Section 93 of the Law – Suspension of the right to terminate a contract.
According to Section 93 of the Law, the NRA is entitled to suspend the rights of contractual parties in cases when the execution of such rights would lead to the termination of the respective contract or any other form of termination of contractual relationships. Pursuant to Section 93 (2) of the Law, the NRA can also apply this right to the contractual relationships of a subsidiary of the institution upon meeting the conditions for the involvement of the respective institution i.e. if the obligation arising from the contract is secured by the institution and if the right to terminate the contract is conditional upon its financial position or insolvency.
The suspension under Section 93 of the Law continues from the time of publication of the decision until the end of the following working day (midnight).
iv) Section 92 of the Law – Restriction on exercising security rights.
The NRA may also decide, pursuant to Section 92 of the Law, on the restriction on exercising security rights. The restriction does not apply to:
- the securities rights of payment systems and systems of clearance and settlement of trading with financial instruments;
- central clearing counterparties licenced in the EU or central clearing counterparties from third countries recognised under Regulation 648/2012;
- central banks in regards to the assets provided by the institution as collateral.
The suspension under Section 92 of the Law lasts from the time of publication of the decision until the end of the following working day (midnight).
Decision on imposing a suspension of trading of the instruments and its publication
The NRA uses its powers to instruct Nasdaq CSD and any internal CSD(s) when and where relevant, requesting its (their) cooperation and leverage to comply with the provisions stipulated in Section 85(2) of the Law (providing for the possibility to derogate from the procedural obligations applicable should such requests and orders come from the institution or other persons). If there are any other communications or requests to provide documentation, these are expected to be covered by the institution itself (following the procedure described in the Bail-in Playbook).
The NRA directly communicates its decision on imposing a freeze on trading and the settlement of specific instruments to the supervisor of financial markets, the competent authority, the Ministry of Finance, and FMIs as described in the Bail-in Playbook of the institution.
Moreover, the NRA issues a public announcement for financial market participants and instrument holders.
Procedure for suspension of trading
The NRA has power under Section 86 (1) 3) of the Law to request the Stock Exchange to suspend trading.
To suspend trading, the specification must include, at a minimum, the following:
- identification of the instruments and liabilities to which the suspension applies (their ISIN);
- the organisers of the securities markets where the specified instruments are traded;
- the time frame of the suspension;
- the NRA's instruction to the Stock Exchange and Nasdaq CSD/Foreign CSD on executing the suspension (pursuant to Section 86 (1) 3) of the Law).
To request the suspension of trading, the NRA performs the following steps:
- contacts the Stock Exchange;
- contacts Nasdaq CSD/ Foreign CSD.
The request may concern only a specific security or be imposed on an entire issue. In the latter case, Nasdaq CSD registers the suspension on the owner's client account. Furthermore, the established procedure stipulates when the suspension becomes effective, as currently the general suspension of a right to use, in accordance with the Nasdaq CSD rules of operation, can become effective no sooner than on the working day following the day of delivery of the request.
Dealing with in-flight transactions
In-flight transactions are transactions that have been executed but not yet settled at the time of the resolution. The following points describe the possible solutions for managing these transactions when the Bail-in tool is applied.
- The NRA shall notify all relevant parties, including the stock exchange, Nasdaq CSD (CSDs), and clearinghouses, that the settlement process must be temporarily halted. This allows time for the proper application of the Bail-in tool.
- The NRA shall explore whether it is possible for Nasdaq CSD (CSD) to use the existing clearing systems to net out positions and minimise the number of unsettled transactions. Moreover, the NRA shall reconcile the net positions post-bail-in to ensure accurate record-keeping.
- The NRA shall instruct Nasdaq CSD to set the record date to a point before the resolution, ensuring that only the settled transactions are affected by the Bail-in. This excludes the in-flight transactions from the immediate impact of the Bail-in.
WDCCI execution and issuance of new securities
Instructing the CSD to execute the write-down and conversions
The process of issuing new shares must be initiated before the NRA issues a decision on WDCCI and Bail-in to ensure alignment of the effective date of the issue of shares and the decision on WDCCI and Bail-in. The specific number and nominal value of the shares is based on the decision made regarding the imposition of resolution administration and a freeze of the relevant capital instruments and eligible liabilities in light of the perimeter of WDCCI and the Bail-in tool.
Within the resolution proceedings, the NRA is exempt from certain requirements in respect of the issue of new shares. In accordance with Section 85(2) of the Law, such an exemption from the requirements includes:
- the obligation to notify the issue;
- the requirement to publish a notification, prospectus;
- the requirement to submit any documentation to the respective competent authorities in advance or register it.
The NRA exercises its powers to instruct the CSD and submit a notification to the Commercial Register as per Article 26(3) of the CRR:
- the obligation to request permission to classify the issued shares as CET1 instruments in order to consider them in relation to the regulatory capital requirement.
The institution itself is responsible for ensuring that the permission is granted in the period after the decision on WDCCI and the Bail-in tool is issued.
Write-down and conversion in CSD registries
Following the steps described in Part 6.1 "Instruct the CSD to execute the write-down and conversions", the NRA can proceed to issue a decision on the application of WDCCI and the Bail-in tool. Regarding the Bail-in tool, the decision shall include the following details:
- specification of the CET1 items and the extent to which they are reduced;
- specification of the relevant capital instruments and bail-inable liabilities that are written down and the extent to which they are written down (stating the identification – ISIN – and the outstanding amount);
- specification of the relevant capital instruments and bail-inable liabilities that are converted, the extent to which they are converted, as well as the conversion rates and the CET1 instruments they are converted into (stating the identification – ISIN – and the outstanding amount).
Disclosure and delivery of WDCCI(EL) decision
In accordance with Section 104 of the Law, the decision is submitted to the competent authorities of the institution under resolution and its branches, the group-level Resolution Authority, the Ministry of Finance, the consolidated competent authority (if applicable), the European Systemic Risk Board, the European Commission, the European Central Bank, the European Securities and Markets Authority, the European Banking Authority, and the system operators specified in the Law on Settlement Finality in Payment and Financial Instrument Settlement Systems.
Additionally, the NRA publishes the information on its website, as well provides the information to the EBA for publishing on its website. Furthermore, information is provided to the official mandatory information storage system as per the Financial Instrument Market Law, if the shares and other relevant financial instruments of the institution under resolution are allowed to be traded on the regulated market. If the instruments are not allowed to be traded on the regulated market, the information is provided to the shareholders and made known to the creditors of the institution.
Details for related process steps
Immediately after the delivery of the decision, the NRA, in accordance with Section 86 (1) 3) of the Law, instructs the Stock Exchange to withdraw the specified instruments from circulation and the central depositary to execute the measures included in the decision.
Where the affected liabilities are not listed or traded, the NRA requests the institution's cooperation to ensure the execution of the decision regarding the implementation of the changes in the internal systems and entries and coordination with the affected FMIs and counterparties.
Removal of securities from trading
Equity instruments, such as shares and other ownership instruments, are cancelled once they have been fully written down. This cancellation process legally nullifies these instruments from the date of their cancellation, with the following consequences for their owners:
- termination of the shareholders' rights, including their voting rights;
- no further opportunity to participate in the bailed-in firm's future decisions.
Upon writing down or cancelling shares or ownership instruments, the new shares or ownership instruments must be immediately issued to the bailed-in creditors to recapitalise the institution under resolution.
Given the specific Resolution Scheme (Resolution Decision), the NRA instructs the CSD to cancel the respective shares and remove them from trading
The NRA instructs Nasdaq CSD to change the entries of the respective instruments. The process represents a withdrawal of the old shares (cancellation on the owner's account in the register of book-entered securities).
Given the specific Resolution Scheme (Resolution Decision), the NRA instructs the Stock Exchange to remove the respective shares from trading
The NRA instructs the Stock Exchange to delist or remove an instrument from trading for marking the instrument's new nominal value or for cancelling it and to relist or readmit the relevant instruments to trading.
Issuance of new shares
The specifics of the issuance of new shares are described in the issued Resolution Scheme. The process starts with the communication between the NRA and the Commercial Registry, and Latvijas Banka as the financial market supervisor approves the initiation of the issuance procedure so that its effective date aligns with the effective date of the decision on WDCCI and Bail-in (the central depository receives information containing details such as the data obtained in the run-up period to the decision on the resolution proceedings and information on the allocation of the new shares to be converted to the shareholders or creditors).
The respective counterparties, specifically the central depository in this case, implement the following steps:
- the owners of the converted instruments and creditors of the converted liabilities that were affected are given the newly issued shares in the nominal amount based on the recapitalisation amount set to ensure the institution's continued operations and the conversion rate set in the decision based on Valuation 2. The central depository is responsible for the implementation of the relevant changes, including the distribution of the shares to the entitled recipients (in accordance with the instruments, amounts, and conversion rates specified in the decision);
- the recipients of the allocation are identified based on the data obtained. The accounts for registration of the newly issued shares can be identified by the central depository when making changes to reflect the conversion of the instruments and liabilities. Where necessary, the new owner's account might be established within the central depository (in some cases, by the respective designated member –most often by the institution itself).
Lifting of the trading and settlement suspension
After the WDCCI(EL) and the approval of the relevant shareholders facing changes to their existing shares based on the conversion rate specified in the Resolution Scheme, the trading and settlement suspension is lifted and the NRA approves the Official publication, prepared by the institution. After that, the institution should publish the communication regarding the new equity's admission to trading and the unfreeze of the other non-affected traded instruments, if any.
Admission to trading and listing of new shares
The NRA reviews and approves the official publication on the admission to trading and listing of any new shares, prepared by the institution, based on the pre-approved templates in its Bail-in Playbook. An official publication on the admission to trading of securities on the regulated market typically includes several essential elements, ensuring that the new shareholders have a clear, comprehensive, and transparent view of their holdings, for example:
- Issuer information:
- Legal and commercial name
- Corporate form, jurisdiction
- Principal activities
- Management and governance
- Financial information
- Details of the securities to be admitted:
- Type and class of the securities
- ISIN and ticker symbol
- Rights attached to the securities
- (any) restrictions on transferability
After that, the institution may publish the communication regarding the admission to trading and listing of new shares.
Preparation of business reorganisation plan
Pursuant to Section 72 of the Law, the relevant institution (including the representative appointed by the institution) or the representative appointed by the NRA shall be responsible for drawing up a business reorganisation plan (BRP). If the Bail-in tool is applicable to two or more group companies, the EU parent company is responsible for the preparation of the BRP covering all institutions that are part of this group (Section 73(2) of the Law). The BRP is submitted by the EU parent company to the group-level resolution authority, which shall further send it to other resolution authorities concerned and the EBA. The steps to be taken by the institution to support the preparation of the BRP are specified in the Bail-in Playbook (i.e. identification of responsible persons/units, their specific tasks, outputs, information flow, and reporting lines within the timelines of the institution and the NRA).
The BRP is prepared and submitted to the NRA within a month of the application of the decision on the write-down and conversion of the eligible instruments and Bail-in (Section 73(1) of the Law). The NRA may extend the period for submission by a maximum of two months from the application of the decision (Section 73(3) of the Law).