French Monetary and Financial Code
In forceI.-For the application of I of Article L. 613-44, eligible commitments are included in the amount of own funds and eligible commitments mentioned in that Article only if they meet the conditions set out in Articles 72a, 72b with the exception of point d of its paragraph 2 and 72c of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013.
II - For the purposes of this Article and Articles R. 613-46-2 to R. 613-46-4, where reference is made to the requirements of Article 92a or Article 92b of the aforementioned Regulation (EU) No 575/2013, the eligible commitments are those defined in Article 72k of this Regulation and are determined in accordance with Chapter 5a of Title I of Part Two of the same Regulation.
III.Liabilities arising from debt instruments with embedded derivatives such as structured notes that meet the conditions set out in I, with the exception of Article 72a(2)(l) of the aforementioned Regulation (EU) No 575/2013, are included in the amount of eligible own funds and liabilities only if one of the following conditions is met:
1° The principal amount of the commitment resulting from the debt instrument is known at the time of issue, is fixed or increasing and is not affected by the embedded derivative component, and the total amount of the commitment, including the embedded derivative, can be valued daily on a liquid and active two-way market by reference to an equivalent instrument without credit risk in accordance with Articles 104 and 105 of the aforementioned Regulation (EU) No 575/2013 ;
2° The debt instrument includes a contractual clause specifying that the value of the claim in the event of insolvency or resolution of the issuer is fixed or increasing and does not exceed the amount of the commitment initially paid.
Debt instruments, including their embedded derivatives, are not subject to any netting agreement and the valuation of such instruments is not covered by article R. 613-68.
Only the portion of the commitment corresponding to the principal amount mentioned in 1°, or to the value mentioned in 2°, is included in the amount of eligible own funds and commitments.
IV.When commitments are issued by a subsidiary established in the European Union in favour of an existing shareholder that is not part of the same resolution group, and this subsidiary is part of the same resolution group as the resolution entity, these commitments are included in the amount of own funds and eligible commitments of this resolution entity for the application of Article R. 613-46-2 if all of the following conditions are met:
1° The commitments are issued in accordance with I of Article R. 613-46-2. 613-46-2;
2° The power referred to in article L. 613-48 in respect of these commitments does not affect the resolution entity's control of the subsidiary;
3° The amount of these commitments does not exceed the amount obtained by subtracting:
a) The sum of the commitments issued in favour of the resolution entity, and purchased by it directly or indirectly through other entities in the same resolution group, and the amount of own funds issued in accordance with 2° of I of Article R. 613-46-2;
b) The amount required in accordance with IV of Article R. 613-46-3.
V.-For the purposes of Article R. 613-46-4, commitments arising from derivatives within the meaning of Article 2(5) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 are included in the amount of eligible own funds and commitments on the basis of full recognition of the counterparties' netting rights.
VI.-For the purposes of Article R. 613-46-4, the own funds of a resolution entity used to meet the overall capital buffer requirement are included in the amount of eligible own funds and commitments.
