This description is prepared to implement the European Banking Authority Guidelines (EBA/GL/2023/01) to resolution authorities on the publication of the write-down and conversion and bail-in mechanism. They specify the information to be made public by resolution authorities on how write-downs and conversions will be applied, in particular with regard to the bail-in tool.
In addition, this description aims to contribute to the successful restructuring readiness of credit institutions and to inform shareholders, creditors who would be subject to the bail-in tool, providers of financial market infrastructure (e.g. central securities depository), other participants in the implementation of the bail-in tool, and interested persons on how the national resolution authority1 could implement the bail-in tool in Lithuania.
The bail-in tool is only one of the four resolution tools that a resolution authority can apply when a credit institution is recognised as failing (or likely to fail) and it is necessary to ensure the continuity of critical functions (e.g. deposit-taking) and/or reduce the impact on the economy and financial system. Under the bail-in tool,2 the credit institution’s losses are covered by the write-down (cancelling) of equity, relevant capital instruments, and eligible liabilities, and the institution is recapitalised again by converting the remaining capital instruments and eligible liabilities into the equity instruments of the institution. One of the main principles of this tool is that losses are first borne by the shareholders of the credit institution, and only then by creditors.
The national resolution authority is directly responsible for making resolution decisions with respect to credit institutions established in Lithuania which, in accordance with Article3 7(3) of Regulation (EU) No 806/2014, do not fall under the direct competence of the Single Resolution Board and are responsible for implementing the resolution scheme adopted by the Single Resolution Board with regard to credit institutions falling within the competence of the Single Resolution Board as referred to in Article 7(2) of Regulation (EU) No 806/2014.
Presented here is a general description4 of how a national resolution authority could implement a bail-in tool in Lithuania when it decides on the resolution of a credit institution itself or implements a resolution scheme approved by the Single Resolution Board. This is the first version of this description and can be updated at any time. It identifies the main actors involved in the implementation of the bail-in tool in Lithuania (see Table 1), provides an illustrative timetable for its implementation (see Table 2) and sets out the main actions at the different stages of its implementation (see Table 3). The implementation of the bail-in tool in the actual resolution of a credit institution can differ from what is described here, taking into account its objectives, the nature, complexity and urgency of the case, and other circumstances.
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Table 1. Participants in the implementation of the bail-in tool in Lithuania
|
Subject |
Name |
|
Central Securities Depository (CSD) |
Nasdaq CSD SE Lithuania branch |
|
Multilateral Trading Facility (MTF) operator |
AB Nasdaq Vilnius, which administers the multilateral trading system in Lithuania – First North market. |
|
Credit institution |
Bank5 subject to resolution action (resolution entity) |
|
National Numbering Agency (issuing an ISIN code6) |
Nasdaq CSD SE Lithuania branch |
|
Resolution authority |
The Bank of Lithuania or the Single Resolution Board, in accordance with the allocation of functions laid down in Regulation (EU) No 806/2014 |
|
Supervisory authority |
The European Central Bank or the Bank of Lithuania, in accordance with the allocation of functions laid down in Regulation (EU) No 1024/20137 |
|
Regulated market operator |
AB Nasdaq Vilnius |
|
Organised trading facility (OTF8) operator |
Financial brokerage firms and market operators authorised to operate organised trading facilities |
|
Account managers |
Legal persons entitled to open and maintain accounts for financial instruments (financial brokerage firms, credit institutions, and central depositories) |
|
Special manager |
Natural or legal person appointed by the resolution authority to replace the management bodies of a credit institution |
Stages of implementation of the bail-in tool in Lithuania:
- preparation for the resolution period;
- the resolution period;
- end of the resolution process.
5 This document covers only those banks whose legal form is a public limited liability company.
6 ISIN code – the international identification number of financial instruments.
7 Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions
8 There is no organised trading facility in Lithuania at the time of drafting this description.
Table 2. Timetable for the implementation of the bail-in tool in Lithuania*
| 1. Pre-resolution period | 2. Resolution period (1) | 2. Resolution period (2) | 3. End of the resolution |
|
1.1. Valuation(s) of the credit institution’s assets and liabilities necessary to take a resolution decision
1.2. Information and data provided
1.3. Resolution decision
1.4. Taking over control of a credit institution |
2.1. Information about the decision on resolutionis announced, this decision is published, and, where applicable, a public disclosure notice is issued regarding undisclosed information
2.2. Suspension of trading on a regulated market and other trading venues (where applicable)
2.3. Suspension of settlements (where applicable)
2.4. Identification of owners/holders of financial instruments
2.5. A list of new shareholders is made
2.6. Preparation and submission of CSD instructions for implementation of write-down and conversion, issuance and registration of new share issuance
2.7. The bail-in tool is technically implemented in CSD systems, accounts of account managers and their customers
2.8. Transfer of shares to a temporary technical securities account (where applicable)
2.9. Informing creditors, opening personal accounts of financial instruments and transferring shares to them (where applicable)
2.10. Updating settlements (where applicable)
2.11. Reopening of trade (where applicable)
2.12. New shares included in the lists of regulated market trading (where applicable) |
2.13. A final second valuation (if not performed at the time of the resolution decision) and adjustments to the application of the bail-in tool (where applicable)
2.14. Preparation and approval of a business reorganisation plan |
3.1. Amended articles of association registered in the Register of Legal Entities
3.2. A third valuation is carried out 3.3. Implementation and monitoring of the business restructuring plan |
* A more detailed description of the steps taken to implement the bail-in tool is given in Table 3. It should be noted that, in the event of a credit institution’s actual resolution, the steps taken to implement the bail-in tool and the order in which they are carried out can differ from those set out in this document.
Table 3. Actions for the implementation of the bail-in tool at different stages of its implementation
|
1. ACTIONS TAKEN DURING THE PRE-RESOLUTION PERIOD
At this stage, the resolution authority carries out pre-resolution actions, such as: contacting the evaluator and initiating the first and second valuations, collecting data and information from the credit institution, carrying out the assessment of compliance with the conditions for resolution, preparing and adopting a resolution decision on applying a resolution action, etc. The credit institution in turn provides the resolution authority with the necessary information and data as well as other preparatory steps. |
||
|
Action |
Responsible entities |
Description of the implementation of the action |
|
1.1. Valuation(s) of the credit institution’s assets and liabilities necessary to take a resolution decision |
Independent evaluator/resolution authority |
Before applying the resolution tools, including the bail-in tool, the resolution authority ensures that a fair, economically reasonable, and realistic valuation of the credit institution’s assets and liabilities is carried out:
Such a valuation is carried out by a person independent of the resolution authority and other public authorities, as well as of the credit institution.
In urgent cases where it is not possible to carry out a full statutory compliant or independent valuation before a resolution decision is taken, a preliminary second valuation can be carried out, which includes a buffer to cover potential additional losses.10 This valuation constitutes a sufficient basis for deciding to apply the bail-in tool, but the resolution authority must ensure that a final second valuation is carried out as soon as possible. |
|
1.2. Information and data provided |
Credit institution/national supervisory authority11 |
A credit institution makes available to the resolution authority, upon request, the data contained in the bail-in data list12 that are deemed necessary for the implementation of the bail-in tool, as well as any other information/data required for resolution purposes, including the data necessary for the assessment of the credit institution’s assets and liabilities in case of a resolution.13
The credit institution/issuer whose financial instruments are admitted to trading on a regulated market must ensure on an ongoing basis that the disclosure obligations under the Market Abuse Regulation (MAR)14 are complied with, i.e. both before and after the resolution decision is taken. It should be noted that, in order to ensure the stability of the financial system, a credit institution can, in accordance with the provisions of the MAR, request that the national supervisory authority postpone the publication of inside information on the planned resolution of the credit institution until the receipt of a notice of the resolution decision or of the adopted implementing decision and the publication of the corresponding inside information notice. |
|
1.3. Resolution decision |
Resolution authority/supervisory authority
|
The resolution authority takes a resolution decision where the following conditions for resolution are met:
The resolution objectives are as follow:
The decision on the resolution of a credit institution falling within the competence of a national resolution authority is taken by the national resolution authority. The decision must comply with the requirements laid down in Article 97(2) of the Republic of Lithuania Law on Financial Sustainability.
The decision on the resolution scheme for a credit institution falling within the competence of the Single Resolution Board is taken by the Single Resolution Board, and the national resolution authority implements this decision of the Single Resolution Board by means of an implementing decision.
The resolution decision or the enforceable decision of the national resolution authority should be enforced without delay.17 Upon notification of the decision of the national resolution authority, the credit institution implements the bail-in tool in its internal systems (the so-called internal bail-in execution of the bail-in), and other stakeholders, in particular financial market infrastructures, do so in their systems having received relevant information and instructions (the so-called external bail-in execution of the bail-in). |
|
1.4. Taking over control of a credit institution |
Resolution authority/special manager |
The resolution authority can decide, after having assessed the specific circumstances and possibilities, on the most effective application of the resolution tools:
In the case of the use of a special manager, they should have all the powers of the meeting and management bodies of the participants of the credit institution. The powers of the management bodies of the credit institution should be suspended from the date of the decision to appoint a special manager, unless that decision provides for a later date.
During the period of resolution action, shareholders of a credit institution should not exercise the voting rights granted by instruments of ownership.
The powers, functions, and actions that the special manager can perform only with the prior approval of the resolution authority and other operating conditions are laid down in the special management activities agreement. |
|
2. ACTIONS CARRIED OUT DURING THE RESOLUTION PERIOD (1)
This is the first bail-in period in which other external actors (e.g. CSDs, account managers, regulated markets, and operators of other trading venues) are involved, with their actions contributing to the implementation of the bail-in tool in addition to those of the national resolution authority. Once the national resolution authority has made public its resolution decision or implementing decision and informed the credit institution thereof, the trading and settlement of financial instruments issued by a credit institution on a regulated market and other trading venues should be suspended without delay and the credit institution should simultaneously publish a public notice regarding undisclosed information.18 In order to properly identify the owners (holders) of the financial instruments subject to the bail-in tool (hereinafter owners), the credit institution obtains information on the owners of financial instruments from account managers, directly or through the CSD, and draws up a list of new shareholders to whom the shares resulting from the conversion of their claims are assigned in accordance with the established procedure. In addition, in order to properly and effectively implement the resolution decision or the implementing decision, the national resolution authority or the credit institution on its behalf draws up and provides appropriate instructions to the CSD on the issuance and registration of a new share issue, as well as on the execution of the write-down and/or conversion of financial instruments, on the basis of which the CSD implements the bail-in tool at the highest accounting level and account managers do so at a lower level of accounting, i.e. in the personal accounts of their clients (the shareholders and creditors of the credit institution). This period is completed by the renewal of settlement and trading and the admission of newly issued shares to trading on a regulated market, where applicable. |
||
|
Action |
Responsible entities |
Description of the implementation of the action |
|
2.1. Information about the resolution decision is announced, this decision is published, and, where applicable, a public disclosure notice is issued regarding undisclosed information |
National resolution authority/credit institution |
After taking a decision on resolution or an implementing decision, the national resolution authority informs the credit institution without delay. The national resolution authority also informs the authorities referred to in Article 98(1) of the Law on Financial Sustainability, providing a copy of the decision and indicating from when the resolution action takes place, as well as other entities, such as CSDs, which contribute to the implementation of the bail-in tool.
In addition, a (non-confidential) copy of the decision or a notice summarising the impact of resolution actions is published on the Bank of Lithuania’s website. The aim is for the decision to be published outside trading hours.19
The national resolution authority also publishes the resolution decision in the Official Journal of the European Union and in the newspapers of each of the Member States of the European Union where the credit institution operates without establishing a branch or has established a branch in that country.
Upon receipt of the notification of a resolution decision or an implementing decision by a national resolution authority, the credit institution/issuer whose financial instruments are admitted to trading on a regulated market, in accordance with the provisions of the MAR,20 publicly announces without delay the undisclosed information about the restructuring of the credit institution through the selected information distributor and uploads it to the Central Storage Facility. |
|
2.2. Suspension of trading on a regulated market and other trading venues (where applicable)
|
National supervisory authority/trading venue operators
|
Upon publication of the resolution or implementing decision of the national resolution authority, the national supervisory authority, in accordance with the Republic of Lithuania Law on Markets in Financial Instruments,21 immediately adopts a decision to issue a binding instruction to operators of trading venues (regulated markets, OTFs, and MTFs) to suspend or terminate trading (de-list) of securities issued by a credit institution for a specified period of time (depending on the resolution decision, this can be by a specific date, before a separate decision to resume trading or to terminate indefinitely). The aim is that the start of the suspension or termination of trade is established outside of trading hours.
The national supervisory authority immediately electronically informs the relevant trading venue operators (regulated market, OTF, and MTF) of the decision taken. If a decision is taken to suspend or discontinue the trading (de-listing) of not all of the securities issued by a credit institution, but only certain securities issued by a credit institution, a list of securities with ISIN codes that are suspended or discontinued are also provided. The decision is also published immediately on the website of the Bank of Lithuania.
Upon receiving a mandatory instruction from the national supervisory authority, regulated market, OTF, and MTF operators, following their internal rules, promptly make a decision on halting or terminating (de-listing) the trading of securities issued by the credit institution and inform the national supervisory authority of its implementation.
Where financial instruments of a credit institution/issuer are admitted to trading on a regulated market, the national supervisory authority, in accordance with the established procedure, notifies the relevant suspension to the European Securities and Markets Authority (ESMA) and the national supervisory authorities of other Member States. The notification is provided through SARIS (Suspension and Restoration Information System). This system also provides notifications on the updating and de-listing of trading in financial instruments. |
|
2.3. Suspension of settlements (where applicable) |
CSD/account managers/national supervisory authority |
Securities settlements can be suspended in accordance with the procedure laid down by legal acts (e.g. suspension of securities settlement, execution of financial instrument events, or securities blocked in the settlement system). |
|
2.4. Identification of owners/holders of financial instruments |
Credit institution/national supervisory authority/CSD/account managers |
A credit institution has the right at any time to require account managers to submit lists of owners of financial instruments issued by it in whose name personal accounts of financial instruments are opened22 (hereinafter — owners of financial instruments). This right can also be exercised by submitting an application to a CSD, which, at the discretion of the credit institution, submits a list of account managers or owners of financial instruments in accordance with the procedure laid down by the Law on Markets in Financial Instruments. The national supervisory authority has a similar right.
The list includes the owners of financial instruments subject to the bail-in tool. |
|
2.5. A list of new shareholders is made |
Credit institution |
A credit institution, in accordance with a resolution decision or an implementing decision of the national resolution authority, a list of owners of financial instruments, and other available information, draws up a list of creditors whose claims are converted23 into shares of the credit institution (hereinafter, the list of new shareholders).
The list of new shareholders includes data on new owners of shares, the number of shares owned by them and other information (data) referred to in Article 891 of the Law on Markets in Financial Instruments. |
|
2.6. Preparation and submission of CSD instructions for implementation of write-down and conversion, issuance and registration of new share issuance
|
National resolution authority/credit institution |
In order to properly and effectively implement the resolution decision or the implementing decision, the national resolution authority (if the credit institution was not instructed to do so) prepares and provides appropriate instructions to the CSD in a harmonised format.
Taking into account the applicable bail-in tool implementation scenario, as well as the CSD rules and the Policy for Executing Orders in Financial Instruments,24 the national resolution authority agrees on and submits to the CSD the relevant instruction(s) for the implementation of the bail-in tool:
Where such instructions are prepared by a credit institution at the direction of national resolution authorities, they must be coordinated with them and the CSD beforehand. |
|
2.7. The bail-in tool is technically implemented in CSD systems, accounts of account managers and their customers
|
CSD/account managers and their clients |
The CSD, having received instructions from a national resolution authority regarding the partial or total write-down and/or conversion of financial instruments, the issuance of new financial instruments, or other actions, writes down, converts, or issues new financial instruments as appropriate in accordance with the CSD and the Policy for Executing Orders in Financial Instruments.
The participants of a CSD (account managers) receive information on ongoing actions and financial instrument events in a standardised form and in the CSD system. In light of the notifications received, the participants of the CSD make appropriate entries in the personal accounts of the holders of financial instruments of the credit institution and inform them thereof in accordance with the procedures laid down in the CSD’s rules.
Where creditors of a credit institution whose claims have been converted to new shares (new shareholders) have personal accounts of financial instruments and information about their account managers is provided, CSDs and account managers transfer their shares to these accounts in accordance with the established procedure. |
|
2.8. Transfer of shares to a temporary technical securities account (where applicable) |
National resolution authority/CSD/provisional technical securities account manager |
Where creditors of a credit institution whose claims have been converted to new shares (new shareholders) do not have personal financial instrument accounts to which the shares could be transferred and/or the information on their account managers is not provided, the CSD transfers those shares to a temporary technical securities account opened by the CSD.
This technical securities account temporarily records the total number of shares allocated to all these creditors and shares allocated to each separately. This account is opened and maintained by the CSD at the request of the national resolution authority if the national resolution authority does not entrust the maintenance of this account to the credit institution. |
|
2.9. Informing creditors, opening personal accounts of financial instruments and transferring shares to them (where applicable) |
National resolution authority/credit institution/credit institution creditors (new shareholders)/CSD/account managers |
Where creditors of a credit institution whose claims have been converted to new shares (new shareholders) do not have personal financial instrument accounts and/or no information about their account managers is provided, the national resolution authority – or, on its behalf, the credit institution – informs these creditors in writing of the shares allocated to them and asks them to open personal accounts of financial instruments within a specified time limit, if they do not have them, in order to transfer their shares to them.
When the creditors (new shareholders) of a credit institution open personal accounts of financial instruments, the account manager of the creditor/new shareholder provides the CSD with the instruction to transfer the specified amount of shares belonging to the new shareholder, which are credited by the account manager with appropriate entries to the creditor/new shareholder’s personal financial instrument account. |
|
2.10. Updating settlements (where applicable) |
CSD/account managers/national supervisory authority |
A CSD resumes the securities settlement in accordance with the procedure laid down by law. |
|
2.11. Reopening of trade (where applicable) |
National supervisory authority/trading venue operators |
The national supervisory authority adopts and submits a decision on the resuming of trading in securities for which trading has been suspended during the implementation of the bail-in tool, if the decision to suspend trading has not specified a specific date for the cessation of trading, on the operators of trading venues (regulated markets, MTFs, OTFs).
Operators of trading venues immediately inform the national supervisory authority when they resume the trading of securities. |
|
2.12. New shares admitted to trading on a regulated market (where applicable) |
National resolution authority/regulated market operator |
The national resolution authority, if not entrusted to the credit institution, submits an application for admission of new shares to trading on a regulated market, provided that the shares of the credit institution have been included on such lists before the decision of the national resolution authority on resolution or an implementing decision is taken. Securities resulting from the conversion of other securities, own funds, or eligible liabilities by the resolution authority are not subject to the obligation to publish a prospectus to trading on a regulated market.25
The operator of a regulated market informs the credit institution and the national resolution authority thereof and publishes this information through its disclosure system after examining the application received and taking a decision on the admission of new shares to trading on a regulated market. |
|
Action |
Responsible entities |
Description of the implementation of the action |
|
2.13. A final second valuation (if not performed at the time of the resolution decision) and adjustments to the application of the bail-in tool (where applicable) |
Independent evaluator/resolution authority |
If the bail-in tool is applied on the basis of the results of a preliminary second valuation, adjustments to the application of the bail-in tool may be necessary following a final second valuation:
|
|
2.14. Preparation and approval of a business reorganisation plan |
Credit institution/special manager/resolution authority/national supervisory authority |
Where a bail-in tool is used to recapitalise a credit institution, the management body of the credit institution or the person appointed by the national resolution authority (the special manager) must prepare and submit a business reorganisation plan to the national resolution authority no later than 1 month (extendable in exceptional cases, up to a maximum period of 2 months) from the date of application of the bail-in tool. It sets out measures aimed at restoring the long-term viability of the credit institution.
The national resolution authority, within 1 month of the submission of the business reorganisation plan, in consultation with the national supervisory authority, assesses whether the implementation of the plan would contribute to restoring the long-term viability of the credit institution.26
Where it is established that the implementation of the plan will restore the viability of the credit institution, the national resolution authority approves the plan. Where the national resolution authority finds that the measures provided for in the plan are inadequate or insufficient to restore the viability of the credit institution, the national resolution authority provides the management body of the credit institution or the person appointed by the national resolution authority (special manager) with comments and requires them to be taken into account and the plan to be amended27 accordingly. |
|
3. ACTIONS TAKEN AT THE END OF THE RESOLUTION PROCESS
This is the final period for the implementation of the bail-in tool, during which the amended articles of association of the credit institution are registered28 in the Register of Legal Entities, the measures provided for in the business reorganisation plan of the credit institution are implemented, the implementation of the plan is monitored, a third assessment is carried out, compensation payments are decided, if necessary, and other final actions are carried out. |
||
|
Action |
Responsible entities |
Description of the implementation of the action |
|
3.1. Amended articles of association registered in the Register of Legal Entities29
|
Credit institution/special manager |
The articles of association of a credit institution are registered in the Register of Legal Entities in accordance with the procedure and within the time limits30 laid down by the regulations of the Register of Legal Entities as a result of the reduction and/or increase of the authorised capital.31
The amended articles of association must be submitted to the Register of Legal Entities within 12 months of the adoption of the decision to amend the articles of association of a credit institution.32 |
|
3.2. A third valuation is carried out |
Independent evaluator/resolution authority/shareholders and creditors of the credit institution |
Once resolution action has been taken, the resolution authority ensures that an independent assessment33 is carried out as soon as possible in order to determine whether the shareholders and creditors of the credit institution whose claims have been written down or converted into equity have not incurred greater losses than the losses they would have incurred if, at the time of the decision to resolve the credit institution, a decision had been taken to wind up the credit institution under insolvency proceedings (also known as valuation 3).
Where it is established that the shareholders of the credit institution under resolution have incurred greater losses than they would have incurred at the time of the institution being wound up under insolvency proceedings, the difference between the losses actually incurred by them and the losses that they would have incurred during the winding-up of the institution under insolvency proceedings is paid to them. The resulting difference is disbursed from the Single Resolution Fund. The amount of compensation is determined by a decision of the Single Resolution Board. |
|
3.3. Implementation and monitoring of the business reorganisation plan |
Credit institution/special manager |
The management body of the credit institution or the person appointed by the resolution authority (the special manager) must implement the reorganisation plan approved by the resolution authority and submit a report to the resolution authority on the implementation of that plan at least every 6 months. The resolution authority can at any time require it to provide information relating to the implementation of the business reorganisation plan. |
9 Conversion rate — a coefficient used to determine the number of shares or other equity instruments into which a specific class of liability will be converted, specifying either the sole instrument of that class or a certain unit value of the debt claim.
10 Such a valuation can be carried out by an independent evaluator by a resolution authority.
11 Structural units of the Bank of Lithuania performing, where applicable, the function of supervision of credit institutions or, where applicable, the capital market.
12 See: https://www.srb.europa.eu/en/content/operational-guidance-bail-implementation for the SRB’s Operational guidance on bail-in playbooks, as well as the Bail-in data list and related instructions.
13 See: https://www.srb.europa.eu/en/content/valuation-data-set.
14 Article 17(5) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC, and 2004/72/EC (MAR).
15 This condition is assessed by the supervisory or resolution authority.
16 See the Republic of Lithuania Law on Insurance of Deposits and Liabilities to Investors.
17 See Articles 88(1) and 97(3) of the Law on Financial Stability.
18 The above order of actions should only be applied if the operations referred to take place outside trading hours. Otherwise, trading would be suspended prior to the publication of the decision of the national resolution authority.
19 In order to allow investors to assess the reasons for the suspension of trading and the situation that has arisen, the actions referred to in points 2.1 to 2.3 are carried out outside trading hours.
20 Article 17(1) of the MAR.
21 Article 102(4)(3) of the Law on Markets in Financial Instruments.
22 See Article 891(1–3) of the Law on Markets in Financial Instruments.
23 If the application of the conversion rate results in fractional shares (not whole shares), the rounding of shares is performed according to the rounding principle applied to financial instrument events (rounding-down), meaning that it is rounded to the last whole unit (minimum nominal quantity), and fractions are discarded.
24 The rules are published on the CSD website: https://nasdaqcsd.com/rules-regulations-and-compliance/
25 Article 1(5)(c) of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
26 Where a credit institution falls under the competence of the Single Resolution Board in accordance with Article 7(2) of Regulation (EU) No 806/2014, the procedure set out in Article 27(16) of Regulation (EU) No 806/2014 applies to the submission and approval of the business reorganisation plan of the credit institution.
27 The management body of the credit institution or the person appointed by the national resolution authority submits to the national resolution authority a modified business reorganisation plan, as appropriate, within 2 weeks of receipt of the comments. The national resolution authority assesses the amended plan accordingly and notifies the management body or the person designated by the national resolution authority within 1 week whether it considers that the comments submitted have been duly taken into account or whether further amendments are needed (Article 84(8) of the Law on Financial Sustainability).
28 Under Article 46(2)(2) of the Law on Financial Sustainability, when carrying out restructuring actions the restructuring institution is not required to notify to other persons, to post a notification or prospectus, to provide the document to other institutions, or to register any actions before performing them.
29 This action can also be taken at an earlier stage of the resolution process.
30 The regulations of the Register of Legal Entities approved by Resolution No 1407 of the Government of the Republic of Lithuania of 12 November 2003 approving the regulations of the Register of Legal Entities.
31 Under Article 88(2)(1) of the Law on Financial Sustainability, the conversion authority has the right to perform or require the restructured entity or other persons immediately – and, if necessary, faster than in any other legal time frame – to carry out all of the administrative and procedural steps necessary to write-off capital instruments and effectively exercise the conversion, including recording all relevant registers or lists of mandatory performance.
32 Under Article 5(1) of the Republic of Lithuania Law on Banks, amendments to the articles of association of the bank shall become invalid where they are not submitted to the Register of Legal Entities within 12 months accordingly of the signing of the articles of association or of the taking of a decision on the amendment of the articles of association of the bank.
33 Although this valuation is carried out after resolution (ex-post valuation), the reference date for the assessment is the resolution decision date.
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1 National resolution authority – a structural unit of the Bank of Lithuania which performs the functions assigned to the resolution authority of financial sector entities.
2 From a legal point of view, the bail-in tool and the write-down and conversion of capital instruments are different. As one of the resolution tools, the bail-in tool is applied by the national resolution authority for the purpose of the write-down and/or conversion of the liabilities of a credit institution and the write-down and/or conversion of the capital instruments of a credit institution in accordance with the power conferred on it in Article 58 of the Republic of Lithuania Law on Financial Sustainability. However, for the purposes of the simplification of this document, the concept of bail-in also includes the write-down and/or conversion of capital instruments.
3 Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (hereinafter – Regulation (EU) No 806/2014).
4 This general description cannot be considered an official interpretation of legal acts of Lithuania nor the European Union, an official position of the Bank of Lithuania or a decision of the Bank of Lithuania in a specific case.