French Monetary and Financial Code
In forceI. - The collège de résolution shall assess, on the basis of a valuation in accordance with Article L. 613-47, the cumulative amount:
1° Where applicable, the amount by which the value of the commitments usable for internal bail-in must be reduced so that the net asset value of the person subject to the resolution procedure is equal to zero ;
2° Where applicable, the amount by which the liabilities available for internal replenishment must be converted into equity securities referred to in Chapter II of Title I of Book II or into other forms of ownership, in order to ensure compliance with the Tier 1 capital requirement imposed on the person subject to the resolution procedure or, where applicable, to enable a bridge institution to meet it.
II. - The assessment referred to in I takes into account any contribution to the capital of the person subject to resolution or, where applicable, the bridge institution, by the deposit guarantee and resolution fund. The cumulative amount mentioned in I must be sufficient to maintain a sufficient level of market confidence in the person subject to resolution proceedings or the bridge institution and to enable it to continue, for at least one year, to fulfil the conditions for authorisation and to carry on the activities for which it was authorised.
If the resolution board has recourse to an asset management structure pursuant to Article L. 613-54, the amount by which the value of the commitments usable for an internal bail-out must be reduced shall take into account a prudent estimate of the asset management structure's capital requirements.
III. - If the nominal value of own funds has been reduced pursuant to the provisions of sub-section 9 of this section, and an internal bail-in measure has been implemented pursuant to I of Article L. 613-55, and there is a difference between the level of reduction decided on the basis of the provisional valuation and the amounts of the definitive valuation referred to in Article L. 613-47, steps shall be taken to compensate creditors and then holders of the equity securities mentioned in Chapter II of Title I of Book II or other ownership securities of the person subject to the resolution procedure, to the same extent.
IV. - The collège de résolution shall establish and maintain procedures to ensure that the valuation and assessment are based on the most recent and complete information possible relating to the assets and liabilities of the person subject to a resolution procedure.
