Decision Amending the Regulation on Contractual Recognition of Write-Down and Conversion Powers for Third Country Law Liabilities — CBCG — ME

[unofficial translation]
Pursuant to Article 44 paragraph (2) item 3) of the Central Bank of Montenegro Law (OGM, 40/10, 6/13, 70/17, 125/23) and Article 108 paragraph (13) and Article 122a paragraph (4) of the Law on Resolution of Credit Institutions (OGM, 72/19, 8/21, 113/24), the Council of the Central Bank of Montenegro, at its meeting held on 17 March 2025, passed the following DECISION AMENDING THE DECISION ON MORE DETAILED REGULATION OF CONTRACTUAL RECOGNITION OF WRITE-DOWN AND CONVERSION POWERS IN RELATION TO CREDIT INSTITUTION’S LIABILITIES GOVERNED BY A THIRD COUNTRY LAW
Article 1
In the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 122/20), in the title of the Decision, the words: “of write-down and conversion powers in relation to credit institution’s liabilities governed” shall be replaced by the following: “powers with regard to liabilities governed”.
Article 2
In Article 1, the words: “the Law on Credit Institutions (OGM, 72/19) - (hereinafter: the Law)" shall be replaced by the following: “the Law on Resolution of Credit Institutions (OGM, 72/19, 8/21, 113/24) - (hereinafter: the Law), as well as the detailed content of the contractual provisions of the financial contract to which the third country law applies, and by which the rights and obligations arising from that contractual relationship may be subject to postponement or restriction.”.
Article 3
The heading of Article 4 shall be amended to read: “Categories of liabilities to which contractual recognition refers to”:
In paragraph (3) item 1) in introductory sentence, the words “at the request of the Central Bank” shall be replaced by the following “at the request of third country resolution authority”.
Article 4
After Article 4, two new Articles shall be added, worded as follows:
“Other types of liabilities that do not need to be the subject of contractual recognition referred to in Article 108 paragraph (1) of the Law
Article 4a
(1)A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law may assess that liabilities cannot be subject to recognition referred to in Article 108 paragraph (1) of the Law, if:
1) the inclusion of the contractual provision would constitute a breach of the law or other regulations
of the third country governing the liability;
2) the inclusion of the contractual provision would be contrary to the decision of a third country
authority;
3) the liability arises from instruments or agreements concluded in accordance with international
standards or protocols that a credit institution or a legal person referred to in Article 3 items 2), 3) and 4) of the Law is unable to amend;
4) the liability is governed by contractual provisions that a credit institution or a legal person referred
to in Article 3 items 2), 3) and 4) of the Law has to accept in order to have access to the services

________________________________________________________________________________________________________________ Decision amending the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 29/25) 2 of non-EU authorities, and which a credit institution or a legal person referred to in Article 3 items 2), 3) and 4) of the Law is unable to amend;
5) the liability relates to the provision of goods or services by a business undertaking or an
entrepreneur that are used for the daily operational functioning of a credit institution or legal person referred to in Article 3, items 2), 3) and 4) of the Law, without the possibility of changing the terms of those contracts;
6) that the liability may be contracted only under the terms established by the counterparty or by
standards, or protocols.
(2)A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall include contractual provisions on the recognition referred to in Article 108 paragraph (1) of the Law, if the Central Bank, on the basis of the credit institution’s notification, finds that the conditions referred to in paragraph (1) of this Article have not been fulfilled, provided that:
1) the nominal amount of the liability created by the relevant contract or debt instrument is equal to or
more than EUR 20 million;
2) the remaining maturity of the contract or instrument is equal to or longer than six months.
(3)Notwithstanding paragraphs (1) and (2) of this Article, where necessary to ensure resolvability, the Central Bank may require that the liability referred to in Article 108 paragraph (1) of the Law be included in the relevant contract. (4)In the case referred to in paragraph (3) of this Article, the Central Bank shall take into account in particular:
1) the amount and type of the contract or instrument;
2) the feasibility of using resolution tools;
3) the credibility of using resolution tools in a way that meets the resolution objectives, taking into
account possible impacts on creditors, counterparties, customers and employees, and possible actions of third-country authorities;
4) the priority ranking of the liability in line with the law governing bankruptcy and liquidation of credit
institutions;
5) the maturity of the liability and the revolving nature of the contract.
(5)Notification from paragraph (2) of this Article shall be submitted on a template provided in the Annex which is attached to this Decision and makes an integral part thereof. Content of the contractual provision on the recognition powers of postponement and restriction
Article 4b
Contractual provisions in financial contracts to which the third country law referred to in Article 122a of the Law applies, that may be subject to postponement or restriction in accordance with Articles 119 to 122 of the Law, shall include the following:
1) recognition and acceptance by the contracting parties of the powers of the Central Bank to suspend
or limit the rights and obligations arising from that contract in accordance with Articles 119 to 122 of the Law;
2) description of the powers of the Central Bank referred to in Articles 119a to 122 of the Law, as well
as the powers and conditions referred to in Article 119 of the Law;
3) recognition and acceptance by the contracting parties that the provisions on the contractual
recognition powers are complete and exclude other contracts, arrangements or agreements between the contracting parties relating to that contract.”.

CHAIRPERSON
Decision number: 0101- 2161 - 3/2025 G O V E R N O R, Podgorica, 17 March 2025 Irena Radović m.p.

_______________________________________________________________________________________________________________Decision amending the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 29/25) 1
ANNEX I
Template 1- Notification identification
Template 1 – Notification identification
Notification identification: 10
Notification date 20
Reference date for templates 2 and 3
30
Reference date for template 4 40
Currency 50
Name of a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law 60 Contact person 70 Email 80 Contact telephone 90

________________________________________________________________________________________________________________ Decision amending the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 29/25) 2 have the same liability ID (column 0010), and the remaining columns shall be filled in only if subject to changes. In particular, (column 0020), “Material amendment” shall be completed only for contracts amending existing liabilities;
3) off-balance sheet items: credit institutions or a legal person referred to in Article 3 items 2), 3),
and 4) of the Law shall provide the priority ranking of the liability in case of bankruptcy proceedings; If data are not available or not applicable, credit institutions or a legal person referred to in Article 3 items 2), 3), and 4) of the Law should not fill in the following columns: 0020, 0050, 0090 (if the liability is regulated by the Montenegrin law), 0130, 0150 and 0210. Column Instructions 0010 LIABILITY ID The liability ID is a unique identifier generated by the notifying credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law that shall be used in all notifications to identify each liability. The credit institution may use the internal code of the liability. 0020 MATERIAL AMENDMENT This field is to be filled in only for contracts/instruments amending existing liabilities. A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law making the notification shall indicate if the amendments to the existing liability are considered material. One of the following values shall be used:
0030 MATURITY DATE
The date upon which all principal and interest of the liability must be repaid (based on the transaction contract). The day, month and year of the maturity date shall be provided. The exact day shall be provided where that information is available, otherwise the first day of the month shall be used. 0040 RENEWABLE One of the following values is used:
1) Yes
2) No
This column shall be filled in with “Yes” if the contract includes an explicit provision regarding its renewability. 0050 RENEWAL FREQUENCY If column 0040 is filled in with “Yes”, credit institutions shall specify the frequency of the maturity renewal in months. 0060– 0130 CONTRACT/INSTRUMENT 0060 DESCRIPTION Contract/instrument description shall have no more than 300 characters. This field shall contain the main characteristics of the contract/instrument not captured in the other fields of this notification (such as. the purpose/essence of the liability, whether the instrument can be written-down and converted under the governing third-country law). 0070 LIABILITY TYPE A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall identify the contract/instrument as being one of the following types:
1) interbank deposits
2) deposits with non-banking clients
3) derivatives
4) borrowing/funding
5) trade finance
6) operational services that are not critical to the functioning of the credit institution
7) other
8)
If more than one type is applicable, the one that best describes the purpose of the contract /instrument shall be selected. 0080 GOVERNING LAW Name and three-letter code of the country the law of which governs the contract/instrument.

________________________________________________________________________________________________________________ Decision amending the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 29/25) 3 0090 PRIORITY RANKING IN CASE OF BANKRUPTCY PROCEEDINGS UNDER THIRD-COUNTRY LAW Enter the value corresponding to the liability’s priority ranking on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the relevant applicable third-country law governing the liability. A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall obtain the said ranking from the relevant third-country resolution authority. 0100 PRIORITY RANKING IN CASE OF BANKRUPTCY PROCEEDINGS IN THE COUNTRY (OR MEMBER STATE) OF INCORPORATION Fill in the value corresponding to the liability’s priority ranking on a scale from 1 to x, with 1 the most subordinated and x the most senior class, as defined by the relevant law applicable in the Member State where the notifying credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law has head office. 0110 NOMINAL AMOUNT IN THE MAIN ORIGINAL CURRENCY Nominal amount of the liability as laid down in the contract/instrument. For framework agreements, a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law should indicate the maximum amount it expects to be reached under that framework agreement or the maximum amount permitted under the framework agreement. If the contract/instrument has more than one currency, a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall report the nominal amount in the prevailing currency in the contract. 0120 MAIN ORIGINAL CURRENCY Currency code corresponding to the denomination of the liability under the contract. If the contract has more than one currency, use prevailing currency in the contract. 0130 NOMINAL AMOUNT IN LOCAL CURRENCY Fill in if the currency used in column 0110 is not the nominal currency. Use the foreign exchange rate applicable at the date of notification. 0140– 0190 IMPRACTICABILITY OF CONTRACTUAL RECOGNITION OF THE POWER TO WRITE DOWN OR CONVERT 0140 CONDITIONS A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall identify the condition(s) under which they consider it is legally or otherwise impracticable to include the contractual provisions, as specified in this Decision (Article 5 paragraph (1) One or more conditions may be identified. All conditions that are applicable shall be notified. 0150 CATEGORY A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall indicate the categories of liabilities specified by the Article 108 paragraph (13) of the Law, if relevant.
0160 REASONS FOR MEETING THE CONDITIONS A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall describe in detail and clearly their reasons for determining impracticability of contractual recognition of the power to write down or convert arising from the conditions reported in column 0140. 0170 LEGAL OPINION? A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall inform the Central Bank if there is a legal opinion concerning the notified impracticability of contractual recognition of the power to write down or convert this liability. A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall indicate one of the following:
1) Yes
2) No
If the answer is “Yes”, they shall transmit the legal opinion to the Central Bank.
0180 NAME
A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall indicate the identity, i.e. the name of the liability’s counterparty. In the case of multi-party contracts, a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall either indicate the main counterparty or use the value “multi-party contract”.

________________________________________________________________________________________________________________ Decision amending the Decision on more detailed regulation of contractual recognition of write-down and conversion powers in relation to credit institution’s liabilities governed by a third country law (OGM, 29/25) 4 Instructions for filling out - Template 3 Template 3 shall be used for submissions concerning notification of categories of liabilities when the Central Bank deems it necessary, in accordance with Article 108 paragraph (13) of the Law, to specify categories of liabilities for which a determination of impracticability of including the contractual provision on recognition of the power to write down or convert can be reached. Column Instructions 0010 CATEGORY A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall indicate the category of liabilities, as specified by the Central Bank in accordance with this Decision. 0020 TOTAL VALUE OF LIABILITIES IN LOCAL CURRENCY IN CATEGORY Total amount of liabilities for each of the notified categories indicated in column 0010. The amount shall be expressed in the currency of the country or (Member State) where a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law has head office. If during the 6-month period following the notification, the credit institution or a legal person referred to in Article 3 items 2), 3), and
4) of the Law determines that the value of the liabilities in the category has increased by more than 10% of the notified amount, it
shall submit another notification to the Central Bank.
0030 REASONS FOR MEETING THE CATEGORIES/CONDITIONS A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall explain why the category of liabilities has been notified. 0040 PRIORITY RANKING IN BANKRUPTCY PROCEEDINGS Fill in the values corresponding to the priority ranking of the liabilities in each category in column 0010, on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the relevant law applicable in the country governing the liability. 0050 NUMBER OF UNDERLYING LIABILITIES A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall indicate the estimated maximum number of contracts/instruments to be held under the respective category of liabilities for a period of 6 months from the date of notification to the Central Bank. Instructions for filling out - Template 4 A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall complete Template 4 with reference to the last quarter for which data are available, except for the values in column 0070. A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law states the outstanding amount of a claim or instrument which is the sum of the principal amount of and the accrued interest on the claim or instrument. The outstanding amount due is equal to the value of the claim that the creditor could file under bankruptcy proceedings. For off-balance sheet items, a credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall provide the priority ranking in case of bankruptcy proceedings for the liability. All values in this template shall be provided in the local currency of the country where the credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law is incorporated. Column Instructions 0010 PRIORITY RANKING IN BANKRUPTCY PROCEEDINGS A credit institution or a legal person referred to in Article 3 items 2), 3), and 4) of the Law shall fill in the values corresponding to the priority ranking of the liabilities in each category in column 0010, on a scale from 1 to x, with 1 being the most subordinated and x the most senior class, as defined by the relevant law applicable in the country governing the liability. 0020 OUTSTANDING AMOUNT OF TOTAL LIABILITIES ACCORDING TO PRIORITY RANKING

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