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Supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria relating to the methodology for setting the minimum requirement for own funds and eligible liabilities (Text with EEA relevance)
Article 4

Article 4 — Business model, funding model and risk profile

  1. For purposes of point (d) of Article 45(6) of Directive 2014/59/EU and within the framework of the consultation required by Article 45(6) of Directive 2014/59/EU, the resolution authority shall take into account information received from the competent authority, including the summary and explanation of the outcomes of the supervisory review and evaluation process conducted pursuant to Article 97 of Directive 2013/36/EU and in particular:
    1. a summary of the assessment of each of the business model, funding model, and overall risk profile of the institution;
    2. a summary of the assessment of whether capital and liquidity held by an institution ensure sound coverage of the risks posed by the business model, funding model, and overall risk profile of the institution;
    3. information on how risks and vulnerabilities arising from the business model, funding model, and overall risk profile of the institution identified in the supervisory review and evaluation process are reflected, directly or indirectly, in the additional own fund requirements applied to an institution pursuant to point (a) of Article 104(1) of Directive 2013/36/EU, based on the outcomes of the supervisory review and evaluation process;
    4. information on other prudential requirements applied to an institution to address risks and vulnerabilities arising from the business model, funding model and overall risk profile of the institution identified in the supervisory review and evaluation process.
  2. The information referred to in paragraph 1 shall be taken into account by the resolution authority where it makes any adjustments to the default loss absorption and recapitalisation amounts, as described in Article 1(5) and Article 2(9), in order to ensure that the adjusted MREL, adequately reflects risks affecting resolvability arising from the institution's business model, funding profile and overall risk profile.

    The resolution authority shall provide the competent authority with a reasoned explanation on how that information has been taken into account in any such adjustment, in the framework of the obligation of the resolution authority to consult the competent authority under Article 45(6) of Directive 2014/59/EU.

  3. In the case of an entity or group which is subject to capital and prudential requirements pursuant to Regulation (EU) No 648/2012 of the European Parliament and of the Council(1) or Regulation (EU) No 909/2014 of the European Parliament and of the Council(2), only capital requirements pursuant to Regulation (EU) No 575/2013 and Directive 2013/36/EU should be taken into account for assessing the default loss absorption and recapitalisation requirements pursuant to Articles 1 and 2 of this Regulation.

    The resolution authority may adjust the loss absorption amount to take account of feasible and credible contributions to loss absorption or recapitalisation envisaged by specific sources required by Regulation (EU) No 648/2012 or Regulation (EU) No 909/2014.

  4. In the case of entities which are subsidiaries of a group subject to a consolidated MREL, the resolution authority may exclude from its assessment of the loss absorption amount and recapitalisation amount any buffer which is set only on a consolidated basis.
  5. Where an authority other than the competent authority has been designated as the responsible authority for setting the countercyclical buffer rate, the resolution authority may request additional information from the designated authority.