Circular NBB_2024_17 / EBA Guidelines on crisis management

NBB_2024_17 – 19 November 2024 Circular – P. 1/9 boulevard de Berlaimont 14 – BE-1000 Brussels tel. +32 2 221 54 65 company number: 0203.201.340 RPM Brussels www.bnb.be Circular Brussels, 19 November 2024 Reference: NBB_2024_17 your contacts: Claire Renoirte tel. +32 2 221 53 50 claire.renoirte@nbb.be Sara Pauwels tel. +32 2 221 55 45 sara.pauwels@nbb.be EBA Guidelines on crisis management Scope This circular applies to:

• Belgian credit institutions referred to in Article 1, § 3, first paragraph, of the Banking Law and entities referred to in Article 424, 2° to 4° of the Banking Law,
• Belgian securities firms referred to in Article 2 of the Law on the status and supervision of securities firms and falling within the scope of Article 13, § 2, of the same Law and entities referred to in Article 270 of the Law on the status and supervision of securities firms, read in conjunction with Article 424, 2° to 4° of the Banking Law (collectively referred to hereinafter as "institutions"). Who, as regards the recovery of credit institutions and early intervention, do not fall under the direct competence of the European Central Bank in accordance with Article 6, fourth paragraph of Regulation (EU) No 1024/20131, and who, as regards resolution, do not fall under the direct competence of the Single Resolution Board pursuant to Article 7, paragraphs 2, 4 and 5, of Regulation (EU) No 806/20142. Summary/Objective Circular NBB_2023_06 / EBA Guidelines on crisis management is repealed and replaced by this circular. This circular implements various guidelines of the European Banking Authority (EBA) on crisis management. 1 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. 2 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. 01 Banque nationale de Belgique BANK VAN BELGIE Eurosystem

Circular – P. 2/9 NBB_2024_17 – 19 November 2024 Madam, Sir, By this circular, the National Bank of Belgium (hereinafter the "Bank") intends to communicate that the guidelines on crisis management of the European Banking Authority (hereinafter the "EBA") are integrated into its supervisory practice and/or resolution authority practice. The circular contains a brief explanation of the various EBA guidelines, accompanied by a link to the documents in question. Each guideline indicates whether it is addressed to the Bank as a competent authority, to the Bank as a resolution authority and/or to institutions as such. I. Context a. Guidelines on the provision of information in a summary or aggregated form for the purposes of applying Article 84(3) of Directive 2014/59/EU These guidelines are addressed to the Bank as a competent authority and as a resolution authority, as well as to institutions. The guidelines indicate what is meant by the provision of information in a summary or aggregated form. These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1523874/EBA-GL-2016-03+GL+on+the+provision+of+information+in+summary+or+collective+form_FR.pdf/5ae6a7c8-dca6-4d4d-89b5-9e2e1c2d47ce. II. Recovery and Resolution Plans a. Recovery Plans The guidelines on indicators for recovery plans and the guidelines on the range of scenarios to be applied in recovery plans (both addressed to the Bank as a competent authority and to institutions) are integrated into the new communication NBB_2024_06 containing the Guidelines concerning recovery plans. This new communication replaces the old communication NBB_2022_07 by incorporating the new EBA guidelines on overall recovery capacity in recovery planning (Communication NBB_2024_06 / Guidelines concerning recovery plans). This new communication also applies to securities firms and can be found at the following link: Communication NBB_2024_06 / Guidelines concerning recovery plans. The credit institutions, banking groups and securities firms concerned are invited to draw up their recovery plan in accordance with this communication. The guidelines can be consulted here: Indicators: https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/Guidelines/2021/EBA-GL-2021-11%20Guidelines%20on%20recovery%20plan%20indicators%20/Translations/1025387/Guidelines%20on%20recovery%20plan%20indicators_FR.pdf

NBB_2024_17 – 19 November 2024 Circular – P. 3/9 Scenarios: https://www.eba.europa.eu/sites/default/documents/files/documents/10180/984909/6fed691e-305e-45fe-8130-ebed2b38cdf1/EBA_2014_FR.pdf?retry=1 Overall recovery capacity: GLs overall recovery capacity in recovery planning (EBA GL 2023 06)_FR_COR.pdf (europa.eu) Institutions that have been authorized by the Bank to draw up a simplified recovery plan may do so using communication NBB_2024_07 / Guidelines on simplified recovery plan obligations for credit institutions and using Communication NBB_2024_07 / Guidelines on simplified recovery plan obligations for securities firms. The Bank may authorize certain credit institutions and certain securities firms to draw up a simplified recovery plan in application of, respectively, Article 113, § 4 of the Banking Law and Article 116, §1 of the Law of 20 July 2022 on the status and supervision of securities firms, as specified in Commission Delegated Regulation (EU) No 2019/348 of 25 October 2018 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regulatory technical standards specifying the criteria to be applied to assess the impact of the failure of an institution on financial markets, on other institutions and on funding conditions and in the EBA guidelines of 7 July 2015 (EBA/GL/2015/16) on the application of simplified obligations under Article 4(5) of Directive 2014/59/EU (as addressed to the Bank as a competent authority). These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1232502/EBA-GL-2015-16+GLs+on+simplified+obligations-FR.pdf/9734d4ed-3089-4887-8ce8-5250314ffe79. b. Resolution Plans The Bank may, under the conditions set out in Article 229, § 4, of the Banking Law, derogate from the obligations regarding the content of a resolution plan, the frequency of updating the plan or the information to be provided by the institution. The conditions for applying such simplified obligations are specified in the guidelines on simplified obligations for certain institutions pursuant to Article 4(5) of Directive 2014/59/EU (as addressed to the Bank as a resolution authority). These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1232502/EBA-GL-2015-16+GLs+on+simplified+obligations-FR.pdf/9734d4ed-3089-4887-8ce8-5250314ffe79. A part of the work carried out when drawing up a resolution plan by the resolution authority consists of verifying to what extent an institution is resolvable in accordance with Article 230 of the Banking Law. If the examination reveals that the resolution of the failure of a credit institution is not deemed possible, the Bank has different possibilities to remedy obstacles to resolvability. Without prejudice in particular to the provisions of the Royal Decree of 5 March 2017 implementing the Law of 25 April 2014 on the status and supervision of credit institutions and securities firms, as regards the drawing up of resolution plans and group resolution plans and the assessment of resolvability, the Bank relies on the guidelines on the definition of measures to reduce or remove obstacles to resolvability and the circumstances in which each measure may be applied under Directive 2014/59/EU.

Circular – P. 4/9 NBB_2024_17 – 19 November 2024 These guidelines must be read together with the regulatory technical standards on resolution planning and resolvability assessment3. These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1110533/EBA-GL-2014-11+GL+on+Powers+to+address+resolvability_FR.pdf/f8a284c6-8f22-4d17-aa96-72cee1a2c71a. III. Early Intervention a. Guidelines on the conditions for triggering early intervention measures under Article 27(4) of Directive 2014/59/EU These guidelines are addressed to the Bank as a competent authority. Article 27 of Directive 2014/59/EU, transposed by Article 234 of the Banking Law, provides for a series of early intervention measures that the supervisory authority may take if a credit institution infringes or is likely in the near future to infringe its regulatory obligations. These guidelines specify the trigger conditions that the Bank will use to assess whether an early intervention measure is on the agenda. The ratings assigned within the framework of the SREP play an important role in this assessment. These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1151520/EBA-GL-2015-03_+FR_GL+on+early+intervention+measures.pdf/f601b964-22d1-44b7-984f-0ece8890597b. b. Guidelines specifying the prerequisites for group financial support under Article 23 of Directive 2014/59/EU These guidelines are addressed to the Bank as a competent authority and to institutions. They implement Articles 438/1 et seq. of the Banking Law. They specify the conditions under which an entity of the group may provide financial support to another entity of the group when the latter meets the conditions for early intervention by the supervisory authority. They must be read together with the articles of Chapter III of Delegated Regulation (EU) 2016/1075, which sets out a series of conditions relating to the provision of the aforementioned financial support. These guidelines are available via the following link: https://www.eba.europa.eu/documents/10180/1137032/EBA-GL-2015-17+GLs+on+financial+support_FR.pdf. 3 Commission Delegated Regulation (EU) 2016/1075 of 23 March 2016 supplementing Directive 2014/59/EU of the European Parliament and of the Council by regulatory technical standards specifying the content of recovery plans, resolution plans and group resolution plans, the minimum criteria that the competent authority must take into account when assessing recovery plans and group recovery plans, the prerequisites for group financial support, the requirements relating to the independence of assessors, the conditions for the contractual recognition of write-down and conversion powers, the procedural and content requirements concerning notifications and the notice of suspension as well as the functioning of resolution colleges, OJ L 184 of 8.7.2016, p. 1.

NBB_2024_17 – 19 November 2024 Circular – P. 5/9 IV. Resolution a. Guidelines for institutions and resolution authorities on improving resolvability in accordance with Articles 15 and 16 BRRD (resolvability guidelines) These guidelines are addressed to the Bank as a resolution authority as well as to institutions. The guidelines aim to implement existing international standards on resolvability and to take stock of the best practices developed so far by EU resolution authorities in the field of resolvability. In particular, these guidelines set out requirements to improve resolvability in the areas of operational continuity in resolution, access to payment systems, funding and liquidity in resolution, execution of internal bail-in, business reorganization and communication. The guidelines are complemented by a section on resolvability testing. Resolvability capabilities must be adapted to comply with the guidelines on resolvability and on transferability. In particular, institutions should, at least every two years, prepare a report in which they carry out a self-assessment to determine whether they meet the resolvability capabilities. Some institutions should also draw up a general master playbook. Resolution authorities should adopt a multi-year resolvability testing program for institutions under their competence. The guidelines on resolvability as well as the guidelines amending them are available via the following links: GL on improving resolvability for institutions and resolution authorities. (https://www.eba.europa.eu/sites/default/files/2024-08/3d6be1c7-b94f-4943-a1f7-9736f2e95be7/GL%20on%20improving%20resolvability%20for%20institutions%20and%20resolution%20authorities_FR_COR.pdf) GL resolvability testing (EBA GL 2023 05)_FR_COR.pdf (europa.eu) b. Guidelines on transferability to complement the resolvability assessment for transfer strategies These guidelines are addressed to the Bank as a resolution authority as well as to institutions. The guidelines specify the specific measures that institutions and resolution authorities should take to improve the resolvability of institutions, groups and resolution groups in the framework of the resolvability assessment carried out by resolution authorities in accordance with Articles 15 and 16 of Directive 2014/59/EU, in particular when transfer tools are provided for in the resolution strategy. These guidelines must be read together with the guidelines on resolvability. They are available via the following link: GL transferability (EBA GL 2022 11)_FR.pdf (europa.eu) c. Guidelines on the interpretation of the different situations in which the failure of an institution is considered to be established or likely under Article 32(6) of Directive 2014/59/EU These guidelines are addressed to the Bank as a competent authority and as a resolution authority.

Circular – P. 6/9 NBB_2024_17 – 19 November 2024 Article 244, § 1 of the Banking Law provides that the resolution authority applies resolution instruments against a credit institution when a series of conditions are met. Thus, pursuant to Article 244, § 1, 1°, it must have been established that the failure of the credit institution is established or likely. These guidelines provide further indications regarding the notion of "established (or likely) failure". They are available via the following link: https://www.eba.europa.eu/documents/10180/1156219/EBA-GL-2015-07_FR_GL+on+failing+or+likely+to+fail.pdf/0b2ac56e-0056-45c7-83b5-300b35803004. d. Guidelines on the types of tests, examinations or studies that may lead to the support measures referred to in Article 32(4)(d)(iii) of the Directive establishing a framework for the recovery and resolution of credit institutions and investment firms These guidelines are addressed to the Bank as a competent authority. Article 244, § 2, 4° of the Banking Law provides that the failure of a credit institution is deemed established or likely if exceptional public financial support for the credit institution is required. Pursuant to Article 244, § 4 of the Banking Law, the Royal Decree of 5 March 2017 implementing the Law of 25 April 2014 on the status and supervision of credit institutions and securities firms, as regards exceptional public financial support and resolution instruments, provides, under strict conditions, an exception for exceptional public financial support provided to avoid or remedy a serious disturbance in the economy of a Member State and to preserve financial stability. If the support measure takes the form of a capital injection or the purchase of capital instruments at prices and conditions that do not confer an advantage on the institution, this support measure may not be granted without the failure of the institution being deemed established or likely only if it is necessary to cover the capital shortfalls identified in stress tests, asset quality reviews or equivalent studies conducted by the European Central Bank, the EBA or national authorities at the level of the country, the Union or the SSM. These guidelines explain in more detail the types of tests, examinations or studies that come into consideration for the application of this provision. They are available via the following link: https://www.eba.europa.eu/documents/10180/986331/EBA_2014_FR.pdf/cf539dec-be6f-4120-ad0f-edf11da0e14f. e. Guidelines on the circumstances constituting a significant threat to financial stability and on the elements relating to the effectiveness of the sale of business under Article 39(4) of Directive 2014/59/EU These guidelines are addressed to the Bank as a resolution authority. When applying the sale of business instrument, the resolution authority must ensure that the sale process meets the conditions provided for in Article 257, § 1 of the Banking Law. The resolution authority may however derogate from these conditions – in the cases provided for in paragraph 2 of the same article – to the extent that the Bank concludes that compliance with them would be likely to compromise the achievement of one or more of the resolution objectives. The guidelines specify the circumstances constituting a significant threat to financial stability that arise from – or are aggravated by – the failure or threat of failure of an institution subject to resolution proceedings within the meaning of Article 39(3)(a) of Directive 2014/59/EU and the elements for which compliance with the requirements concerning the sale of the institution, as provided for in Article 39(1) of Directive 2014/59/EU, would be likely to harm the effectiveness of the sale of business instrument by limiting its capacity to address the threat or to achieve the resolution objectives referred to in Article 31(2)(b) of Directive 2014/59/EU. They are available via the following link: https://www.eba.europa.eu/documents/10180/1156647/EBA-GL-2015-04_FR_GL+sale+of+business+tool.pdf/40ef977d-b463-4853-9079-fb952baac9d8.

NBB_2024_17 – 19 November 2024 Circular – P. 7/9 f. Guidelines on the minimum list of services or infrastructure necessary to enable a receiving entity to effectively exercise the activities transferred to it under Article 65(5) of Directive 2014/59/EU These guidelines are addressed to the Bank as a resolution authority. When resolution authorities transfer certain activities to a third party as part of a resolution procedure, they may, in accordance with Article 279 of the Banking Law, require the institution in liquidation or entities of its group to provide all operational services and infrastructure necessary for it to effectively exercise the activities transferred to it. These guidelines explain the elements that the Bank is required to evaluate in this context. They are available via the following link: https://www.eba.europa.eu/documents/10180/1155932/EBA-GL-2015-06_FR_GL+minimum+list+of+services.pdf/0fc2f152-9517-4c8d-96dc-54a67736120f. g. Guidelines on the determination of the circumstances in which the liquidation of assets or liabilities under normal insolvency procedures would be likely to have a negative effect on one or more financial markets under Article 42(14) of Directive 2014/59/EU These guidelines are addressed to the Bank as a resolution authority. The Bank as a resolution authority may only resort to the asset separation instrument under the conditions set out in Article 265, § 1 of the Banking Law. One of these conditions concerns the fact that the situation on the market for the assets in question is such that their liquidation as part of a normal insolvency procedure could have a negative effect on one or more financial markets. These guidelines explain in more detail to the Bank the assessment of the aforementioned condition. They are available via the following link: https://www.eba.europa.eu/documents/10180/1156565/EBA-GL-2015-05_FR_GL+on+asset+separation+tool.pdf/6192bd4d-483f-42cf-9874-1b515a900db4. h. Guidelines concerning the conversion rates of debt into equity under an internal bail-in These guidelines are addressed to the Bank as a resolution authority. These guidelines, established in accordance with Article 50(4) of Directive 2014/59/EU, concern the setting of conversion rates of debt into equity during an internal bail-in. They indicate to resolution authorities when they must compensate creditors when applying the internal bail-in instrument to an institution, an entity or claims or debt instruments that are transferred to a bridge institution or within the framework of the sale of business instrument or the asset separation instrument, and thus make use of the possibility of setting differentiated conversion rates. Furthermore, they also apply to the conversion of relevant equity instruments at the point of non-viability, insofar as Article 60(3)(d) of Directive 2014/59/EU subordinates the conversion of relevant equity instruments to compliance with the principles set out in Article 50 of Directive 2014/59/EU as well as in the EBA guidelines. They are available via the following link: https://www.eba.europa.eu/documents/1