Measures to ensure the lasting fulfilment of regulatory requirements

(1) The supervisory authority may order measures against an institution to ensure the lasting fulfilment of the respective requirement, where its capital, financial, or earnings development, or other circumstances, justify the assumption that it does not meet, or is likely in future not to meet, at least one of the following requirements: 1. the requirements of Regulation (EU) No 575/2013, 2. the requirements of this Act or of the statutory instruments issued on the basis of this Act, or 3. the minimum requirement for own funds and eligible liabilities and the requirement for loss-absorbing capacity under sections 49 to 51 of the Recovery and Resolution Act.
(2) The supervisory authority may, in particular, 1. order that the institution submit to the supervisory authority and the Deutsche Bundesbank a reasoned presentation of the development of its material business activities over a period of at least three years, including projected balance sheets, projected profit and loss accounts, and the banking supervisory ratios, 2. order that the institution examine measures to better shield against or reduce the risks identified by the institution as material and the associated risk concentrations, and report on this to the supervisory authority and the Deutsche Bundesbank, whereby concepts for exiting individual business areas or separating off parts of the institution or group should also be considered, 3. order that the institution report to the supervisory authority and the Deutsche Bundesbank on suitable measures to increase its Tier 1 capital, its own funds, and its liquidity, 4. order that the institution develop a concept to avert a possible danger within the meaning of section 35(2), point 4, and submit it to the supervisory authority and the Deutsche Bundesbank, 5. order that the institution use its net profits to strengthen its own funds, and, in particular, prohibit or restrict withdrawals by the owners or partners, and distributions or interest payments to shareholders, partners, or holders of Additional Tier 1 instruments, insofar as non-payment does not constitute an event of default for the institution, 6. prohibit or restrict accounting measures that serve to offset a net loss for the year that has arisen or to report a balance sheet profit, 7. order that the payment of any type of profit-dependent returns on own funds instruments cease, in whole or in part, without substitution, where the profit-dependent returns are not fully covered by a net profit for the year achieved, 8. prohibit or restrict the granting of loans within the meaning of section 19(1), 9. order that the institution take measures to reduce risks, including the risks associated with outsourced activities and processes, insofar as these arise from particular types of business and products or the use of particular systems, 10. order that the institution restrict the total annual amount that it provides for the variable remuneration of all managers and employees (total amount of variable remuneration) to a particular proportion of the annual result, or eliminate it entirely, insofar as these variable remuneration components are not agreed by collective bargaining agreement, or, within its scope of application, by agreement of the parties to the employment contract on the application of the collective bargaining provisions, or, on the basis of a collective bargaining agreement, in a works or service agreement, 11. prohibit the payment of variable remuneration components, or restrict it to a particular proportion of the annual result, insofar as these variable remuneration components are not agreed by collective bargaining agreement, or, within its scope of application, by agreement of the parties to the employment contract on the application of the collective bargaining provisions, or, on the basis of a collective bargaining agreement, in a works or service agreement, 12. order that the institution set out how, and within what period, the requirements named in subsection (1) can be lastingly met again (restructuring plan), that it make improvements, and that it report regularly to the supervisory authority and the Deutsche Bundesbank on the progress of the measures taken for this purpose, 13. order that the credit institution implement one or more courses of action from a recovery plan under section 13 of the Recovery and Resolution Act, 14. order that the institution implement one or more measures from a restructuring plan under point 12, 15. order that the institution reduce short-, medium-, or long-term ESG risks, in particular with regard to the objectives of Regulation (EU) 2021/1119, by making adjustments to its business organisation, in particular to its business strategy, risk strategy, or risk management, or by sharpening the ESG risk plan to be drawn up under section 26d(1), and 16. order that the institution carry out stress tests or scenario analyses, in order to be able to assess the risks arising from risk positions in crypto-assets and from the provision of crypto-asset services within the meaning of Article 3(1), point 16, of Regulation (EU) 2023/1114 as amended on 13 December 2023.
(3) The restructuring plan under subsection (2), point 12, must be transparent, plausible, and reasoned. The restructuring plan must 1. name concrete objectives, intermediate objectives, and deadlines for implementing the measures set out, which can be reviewed by the supervisory authority, 2. assign responsibilities, 3. set out reporting channels, 4. set out the effects of the restructuring plan on the own funds position, including medium-term capital planning, and 5. present the existing capital and earnings position and its planned development. The supervisory authority may inspect the restructuring plan and the related documents at any time. The supervisory authority may require the restructuring plan to be amended and lay down specifications for this, insofar as it considers the objectives, intermediate objectives, and implementation deadlines stated to be insufficient, or where material circumstances relevant to the restructuring plan have changed, or the institution cannot meet the objectives, intermediate objectives, or implementation deadlines.
(4) The supervisory authority may make the orders designated in subsection (2), points 5 to 11 and 13 to 15, and subsection (5), second sentence, only where the institution or the mixed financial holding company has not remedied the danger within the meaning of subsection (1) within a period to be determined by the supervisory authority. Insofar as this is necessary to prevent a deterioration of the institution's capital, financial, or earnings development within the meaning of subsection (1) that is to be expected in the short term, or insofar as measures under subsection (2), points 1 to 4 and 12, have already been taken, such orders are also permissible without a prior deadline being set.
(5) Subsection (1), subsection (2), points 1 to 7, 9 to 12, and 14 to 16, and subsection (4) apply correspondingly to superordinate undertakings under section 10a and to institutions and financial holding companies obliged to carry out partial consolidation under Article 22 of Regulation (EU) No 575/2013, where one or more of the requirements listed in subsection (1) are not met on a consolidated basis, or are likely in future no longer to be capable of being met. For an institution belonging to a group that is exempted under section 2a(1), the supervisory authority may order that the provisions of Articles 24 to 403 of Regulation (EU) No 575/2013 again apply, in whole or in part, notwithstanding the exemption.
(6) Resolutions on a profit distribution are void, insofar as they conflict with an order under subsection (2) or (5). No rights may be derived from provisions in contracts on own funds instruments, insofar as these conflict with an order under subsection (2), points 5 to 11 or points 13, 14, or subsection (5).
(7) Where the total amount of variable remuneration is eliminated, or the payment of variable remuneration components is prohibited, under subsection (2), point 10 or 11, the supervisory authority may order that the entitlements to the grant of variable remuneration components lapse, in whole or in part, where, at the time the payment is prohibited or within a period of two years after the payment is prohibited, 1. the institution takes up extraordinary government support, and the conditions for prohibiting the payment have not ceased to exist by this point in time, or have ceased to exist solely on the basis of these measures, 2. an order of the supervisory authority under subsection (2), points 5 to 11 and 13 to 15, exists or is made, or 3. measures under section 46 are taken, or a resolution order within the meaning of section 77 of the Recovery and Resolution Act has been made. Such an order should, in particular, be made where 1. the entitlements to the grant of variable remuneration components arose on the basis of provisions of an institution's remuneration system that conflict with the requirements under section 25a(1), third sentence, point 6, or 2. it is to be assumed that, without the extraordinary government support, the institution would not have been in a position to grant the variable remuneration components. Where it is to be assumed that the institution could have granted part of the variable remuneration components, the variable remuneration components are to be reduced appropriately.
(8) Where the conditions under subsection (7), first and second sentences, are met, the supervisory authority may also order the institution to reduce or eliminate all variable remuneration of managers and employees withheld under section 25a(5), fourth sentence, of this Act and section 20(1) and (2) of the Institutions Remuneration Ordinance. The supervisory authority may also make orders under subsection (2), points 10 and 11, and under subsection (7), first sentence, where an institution takes up extraordinary government support and the order is required to preserve a sound capital or liquidity position or to bring about an early end to the government support. Where an institution takes up government support, the supervisory authority may also prohibit, in whole or in part, the payment of variable remuneration components to the institution's managers, and order the lapse of the corresponding entitlements. Entitlements to variable remuneration that arose before 1 January 2011 may not be reduced or eliminated either under subsection (7) or under the first and second sentences. The third sentence does not apply to entitlements to variable remuneration that arose before 1 January 2012.
(9) Institutions must take account of the possibility of an order under subsection (2), points 10 and 11, and under subsections (7) and (8), first to third sentences, in contractual agreements with their managers and employees. Insofar as contractual agreements on the grant of variable remuneration conflict with an order under the first sentence, no rights may be derived from them.
(10) The supervisory authority may also order a measure under subsections (1) to (8) against an undertaking named in section 10(4), first sentence, or a group named there, where that undertaking or group does not meet the increased capital requirements ordered under section 10(4).
(11) For the purpose of implementing the orders under subsection (8) or section 10(4), sections 7 to 7f, 9, 10, 12, 13, and 15 of the Financial Market Stabilisation Acceleration Act apply correspondingly to resolutions of the institution's shareholders' meeting concerning capital measures. This also applies where private or public bodies other than the Financial Market Stabilisation Fund contribute in part or in full to meeting the capital requirements.