As result of the financial crisis, the EU carried out a significant reform of the regulatory framework for financial services to increase the resilience of financial institutions. This reform was largely based on the FSB standards on resolution regimes of financial institutions. Among its measures, in may 2014, the reform package included the adoption of a Directive on Restructuring and Resolution of Entities (BRRD) with the objective of solving problems of lack of solidity and unfeasibility of credit institutions and investment service companies.
In November 2016, the European Commission (EC) published a package of proposals for the reform of the BRRD that incorporated the international standards of total loss absorption capacity and recapitalization, with the aim of improving operational execution, strengthening competencies in internal recapitalization and avoiding legal uncertainty.
In this context, in June 2019 the European Parliament (EP) and Council published Directive (EU) 2019/879, amending the BRRD, in relation to the following areas: scope, definitions and authorities; preparation; regulation; and resolution of cross-border group.
The EP and Council published the Directive (EU) 2019/879 amending the Directive 2014/59 /EU (BRRD), including amendments regarding several aspects covered in the BRRD.
The BRRD II lays down rules and procedures relating to the recovery and resolution of institutions that are established in the Union; financial institutions that are established in the Union when the financial institution is a subsidiary of a credit institution or investment firm; financial holding companies, mixed financial holding companies and mixed-activity holding companies that are established in the Union; parent financial holding companies in a Member State, Union parent financial holding companies, parent mixed financial holding companies in a Member State, Union parent mixed financial holding companies; and branches of institutions that are established outside the Union in accordance with the specific conditions laid down in this Directive.
This document includes the modifications led by the Directive (EU) 2019/879 or BRRD II:
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