Regulatory Alerts2020-11-24
Guidance Notice on the treatment of certain liabilities of CRR institutions under insolvency law
The German Federal Financial Supervisory Authority (BaFin) clarifies the classification and insolvency ranking of debt instruments issued by CRR institutions under section 46f of the German Banking Act (KWG). The guidance distinguishes preferred from non-preferred liabilities by mandating contractual maturities of at least one year and explicit references to lower insolvency ranking, thereby transposing EU bail-in rules and Total Loss-Absorbing Capacity (TLAC) standards into national law. Effective from 21 July 2018 with transitional provisions for prior issuances, the framework establishes a clear creditor hierarchy that ensures sufficient loss-absorbing capacity and legal certainty during bank resolution.
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