Application of the minimum requirement for own funds and eligible liabilities to wind-down entities

(1) The resolution authority does not determine the requirement referred to in section 49(1) for wind-down entities.
(2) By way of derogation from subsection (1), the resolution authority may assess whether it is justified to determine the requirement referred to in section 49(1) for a wind-down entity on an individual basis at a level exceeding the amount sufficient for loss absorption under section 49c(2), point 1. In its assessment, the resolution authority takes into account, in particular, possible effects on financial stability and the risk of contagion to the financial system, including with regard to the funding capacity of deposit guarantee schemes. Where the resolution authority determines the requirement referred to in section 49(1), the wind-down entity satisfies that requirement with: 1. own funds, 2. liabilities that satisfy the eligibility criteria set out in Article 72a of Regulation (EU) No 575/2013, with the exception of Article 72b(2)(b) and (d) of that Regulation, or 3. the liabilities referred to in section 49b(2).
(3) Article 77(2) and Article 78a of Regulation (EU) No 575/2013 do not apply to wind-down entities for which the resolution authority has not determined the requirement referred to in section 49(1).
(4) Holdings in own funds instruments and eligible liabilities instruments issued by subsidiary institutions that are wind-down entities for which the resolution authority has not determined the requirement referred to in section 49(1) are not deducted under Article 72e(5) of Regulation (EU) No 575/2013.
(5) By way of derogation from subsection (4), an institution or group entity that is not itself a resolution entity, but is a subsidiary undertaking of a resolution entity or of a third-country undertaking that would be a resolution entity if it were established in the Union, must deduct its holdings in own funds instruments in subsidiary institutions belonging to the same resolution group that are wind-down entities for which the resolution authority has not determined the requirement referred to in section 49(1), where the total amount of those holdings equals or exceeds 7 per cent of the total amount of its own funds and liabilities that satisfy the eligibility criteria set out in section 49f(2). The amounts are determined annually as at 31 December, as the average of the preceding twelve months.