The European Association of Co-operative Banks (EACB) welcomes the opportunity to comment on the EBA Consultation Paper Draft Regulatory Technical Standards on impracticability of contractual recognition of bail-in clause under Article 55(6) of Directive 2014/59/EU and Draft Implementing Standards for the notification of impracticability of contractual recognition under Article 55(8) of Directive 2014/59/EU.
The approach provided in the draft RTS in terms of proposed conditions of impracticability is currently too prescriptive and risks missing the actual cases of non-recognition of bail in when these may occur in practice as a result of combination of circumstances which cannot be easily categorised or reduced to specify predetermined types of conditions or cases.
Having regard to the experience with contractual recognition clauses and the competitive disadvantages they pose in the international markets, a too restrictive application of the newly introduced possibility to waive the need to introduce contractual recognition clauses will force EU institutions to withdraw from certain markets or transactions with third country counterparties. Therefore, we would suggest EBA to adopt a more flexible and open approach regarding the specification of conditions which indicate a legal or other impracticability. Moreover, we suggest EBA to consider a more flexible and risk-based approach in determining the time needed for inclusion of the contractual recognition clause.