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Part II Qualitative Capital Requirements, 3 The Use of EU Regulations to Establish Qualitative Requirements in the Fields of Banking Supervision and Resolution: Their impact on civil law and corporate relationships »

Karl-Philipp Wojcik, Mateusz Krauze
From: Capital and Liquidity Requirements for European Banks (1)
Edited By: Bart P.M. Joosen, Marco Lamandini, Tobias H. Tröger
This chapter examines the proliferation of the use of EU regulations in the field of EU financial services regulation and in particular the area of banking supervision and bank resolution law. The total loss absorbing capacity (TLAC)/minimum requirement for own funds and eligible liabilities (MREL), net stable funding ratio (NSFR), and the prior permission regimes under Articles 73 and 77–78a of the Capital Requirements Regulation (CRR) are good examples to illustrate the case. While in the case of TLAC/MREL and the NSFR the impact is more of an indirect nature, since formally parties are still free to exercise their contractual autonomy, they have to adhere to the various regulatory requirements if they wish to benefit from a certain regulatory treatment and meet certain regulatory targets set by the EU legislator. The prior permissions regime goes even further in that it is a precondition for the exercise of certain actions such as classification of instruments as Common Equity Tier 1 (CET1) as well as early repayments, redemptions, and other similar actions with respect to own funds instruments and other eligible liabilities instruments. These interactions are driven by the objective of EU financial services regulation to attain financial stability, to protect depositors and investors, and to avoid other externalities which the conduct of banking business can carry, even if this comes at the expense of certain rights enjoyed under civil and corporate laws.