On September 22, 2014, the EBA published final Guidelines on the types of tests, reviews or exercise that would exempt an injection of own funds or acquisition of capital instruments from being considered a form of extraordinary public financial support under the Banking Recovery and Resolution Directive (the “BRRD”). Under the BRRD, a request by a bank for extraordinary public financial support is an indicator that the firm is failing or is likely to fail which will trigger resolution. However, in certain circumstances, such a request will not trigger resolution, including when an injection of own funds or an acquisition of a capital instrument is used to address a capital shortfall resulting from a stress test, an asset quality review or other equivalent exercises. The Guidelines apply to national regulators and aim to ensure a consistent application of the BRRD provisions across the EU. National regulators are required to implement the Guidelines by January 1, 2015.
The Guidelines are available at: