BAIL IN: la legge imposta e la consapevolezza per i risparmi in banca

Authorities must have confidence that the exercise of resolution powers will be legally enforceable in relation to a Firm’s loss-absorbing resources.

Where instruments are governed by a “foreign law”, an acceptable level of confidence can be achieved only where there are “legal frameworks in place by which the write-down or conversion of the instruments under the issuer’s home resolution regime can be recognised promptly and with an adequate degree of predictability and certainty in other relevant jurisdictions, or where the instruments include legally enforceable contractual provisions recognising the application of resolution tools by the relevant resolution Authority”.

The inclusion of contractual “bail-in” recognition clauses in debt instruments governed by the laws of a jurisdiction other than the home jurisdiction of the issuing entity can help support the cross-border enforceability of “bail-in actions taken by the home resolution Authority in relation to the issuing entity”.

Although there cannot be complete certainty, “courts will generally enforce contractual provisions properly entered into unless they are deemed to be contrary to Public policy”.

Capital or debt instruments that are governed by the laws of a jurisdiction other than that of the issuing entity “should include legally enforceable provisions recognising a write-down, cancellation or conversion of debt instruments in resolution (“bail-in”) by the relevant resolution Authority if the entity enters resolution”.

Where an entity has issued debt governed by the law of a foreign jurisdiction, there is “a risk that the exercise of statutory (“bail-in”) powers by the resolution Authority of the issuing entity to write down, cancel or convert debt into equity may not be recognised in foreign jurisdictions”.

Contractual recognition clauses can help support the cross-border enforceability of such actions – [see to (*), at the end – in VERY_§_IMPORTANT!] – and should be included in capital or debt instruments unless the home Authority of the issuing entity is sufficiently confident that a write-down or conversion of those instruments under the home resolution regime would be recognised under a statutory framework for cross-border recognition in the jurisdiction of the governing law of the contract.

The following principles and elements should be considered in developing such recognition clauses:

(a) Clear agreement by the debt holder to be bound by the terms of a “bail-in” under the statutory powers of the relevant resolution regime.

The contractual provisions should contain a clear agreement by the debt holder to be bound by the terms of a “bail-in” under the statutory powers of the resolution regime applicable to the issuer and a further agreement that, in the event of the application of such statutory powers, other terms and conditions governing the debt instrument “will be overridden where necessary to give effect to the terms of the statutory bail-in”.

The purpose of such agreement is “to make the enforceability and effectiveness of a statutory bail-in under a (foreign) resolution regime a matter of contract law, rather than leaving open whether such write-down or conversion would be enforceable extra-territorially under conflict of law rules”.

(b) Consistency with the statutory “bail-in” regime.

The contractual provisions should be drafted in a manner that is consistent with and supports the applicable statutory “bail-in” regime.

For example, “the contractual provisions should make it clear that the terms of the bail-in will be determined by the relevant resolution Authority”.

Where an instrument also contains contractual mechanisms for conversion or write-down (whether fully or partially) upon certain defined “triggers” outside of resolution (for example, where the Firm’s capital ratio falls below a particular level), “it should be clear that this contractual bail-in mechanism is distinct from the exercise of statutory bail-in by the home resolution Authority and that there may be circumstances where both could be applied consecutively”.

(c) Disclosure.

The consequences of a “bail-in should be disclosed prominently to debt holders in accordance with applicable disclosure requirements under local law”.

Care should be taken to ensure that the offering documents and any statements contained therein comply “with the disclosure requirements in relevant jurisdictions”.

In particular, applicable securities regulation “is likely to require clear disclosure about the potential effect that a statutory bail-in under the home resolution regime could have on the value of the instrument and the claim of the debt-holder”.

(d) Enforceability under the local law.

The enforceability and effectiveness of a “bail-in” of a debt instrument governed by foreign law will ultimately be determined by courts in accordance with that foreign law.

Firms should be expected to be able to demonstrate to the relevant Authorities in their home jurisdiction prior to issuing the instrument under foreign law that a statutory “bail-in” of the instrument by home Authority will be enforceable as a result of the its contractual recognition provisions.

Such expectation could be met through the provision of a reasoned independent legal opinion that addresses:

(1) the enforceability of the specific contractual provisions under the specific governing law;

(2) the validity of specific consents or waivers of legislative provisions under the foreign governing law (for example, provisions designed to prevent amendments to bond documentation without bondholder consent), “where these are required to give effect to the bail-in”;

(3) the materiality and likely effect of any qualifications or limitations (for example, on Public policy grounds) on the enforceability of any “bail-in” action;

(4) “compliance with applicable disclosure requirements, to the extent that breaches might compromise the enforceability of the contractual recognition provisions under the debt instruments”.

l- – – – – VERY_§_IMPORTANT

Financial Stability Board (FSB, Resolution and Crisis Management, the), “Principles for cross-border effectiveness of resolution actions” – Guidance Paper: November 3, 2015

http://www.financialstabilityboard.org/wp-content/uploads/Principles-for-Cross-border-Effectiveness-of-Resolution-Actions.pdf

[see to everything – as well as, the pages 7-8 and 15-16].

(*) Contractual recognition provisions of the kind described in this subsection are distinct from contractual conversion or write-down clauses. The former operate as a contractual agreement to be bound by the exercise of statutory “bail-in” powers by a resolution Authority (which does not depend on conversion and/or write-down terms within the debt instrument).

The latter refers to contractual provisions for write-down or conversion in circumstances and on terms that “are specified within the debt instrument itself”.

°l° November 4, 2015

http://www.pianoinclinato.it/too-regulated-to-be-disrupted/#comment-2343235437

[(for the rest of the references, IN) S. Calamai (PianoInclinato, it), “#TRTBD: Too Regulated To Be Disrupted” – October 8, 2015 (to All!)]

– – – – -l BE CAREFUL

サーファー © Surfer [Cross-border l- and -l local l LAW = means warned, means saved – for the “analysis of blood” l- OR -l BLOOD OF ANALYSIS!]

Voglio proprio vedere quando tocca a qualche banca tedesca chi ce li mette i marchi tedeschi.

@fi­nan­za,

‘l e’c otanarbni òp nu onos

@fi­nan­za,

‘l e’c otanarbni òp nu onos

.eizarG .eselgni leb out li etnemlicaf errudart rep knil nu itserva’l