Power to suspend contractual obligations where an institution is failing or likely to fail

(1) The resolution authority may direct that all or specific payment or delivery obligations of an institution or group entity under contracts to which it is a party be suspended, where
1. the institution or group entity is failing or likely to fail within the meaning of section 62(1), first sentence, point 1;
2. there are no immediately available private-sector measures within the meaning of section 62(1), first sentence, point 3, letter a, capable of removing the institution's or group entity's failing or likely to fail;
3. the direction is necessary to prevent further deterioration of the financial position of the institution or group entity; and
4. the direction is necessary
a) to reach the determinations provided for in section 62(1), first sentence, point 2,
b) to decide which resolution actions are appropriate, or
c) to ensure the effective application of one or more resolution tools. Before exercising this power, the resolution authority consults the supervisory authority. The supervisory authority comments on the substance of the consultation without delay.
(2) The resolution authority may also direct a suspension where this is necessary to implement a decision of the Board, or where the Board has determined that the conditions under subsection (1) are satisfied and has notified the resolution authority accordingly. The resolution authority bases the direction of the suspension on the determinations and requirements of the Board's decision or notification. In that case, subsection (1), second sentence, does not apply to undertakings within the meaning of Article 7(2)(a) of Regulation (EU) No 806/2014.
(3) Exempt from a suspension are payment and delivery obligations owed to systems within the meaning of section 1(16) of the Banking Act, system operators within the meaning of section 1(16a) of the Banking Act, central counterparties within the meaning of section 1(31) of the Banking Act authorised in the Union under Article 14 of Regulation (EU) No 648/2012, third-country central counterparties recognised by the European Securities and Markets Authority under Article 25 of that Regulation, and central banks.
(4) In determining the scope of a suspension, the resolution authority has regard to the circumstances of the individual case. In doing so, the resolution authority assesses in particular whether it is appropriate to extend the suspension to eligible deposits, in particular covered deposits, held by natural persons, micro-enterprises and small and medium-sized enterprises.
(5) Where a suspension is extended to eligible deposits, the resolution authority sets, for each day of the suspension, an appropriate amount that is exempt from the suspension.
(6) The period of suspension must be as short as possible. The suspension may be directed for a period beginning no earlier than the public announcement of the suspension and ending, at the latest, at the close of the business day following that announcement. Section 137(1) applies correspondingly.
(7) In directing a suspension, the resolution authority has regard to the possible effects of the suspension on the orderly functioning of the financial markets, and has regard to applicable law and to the powers of courts, judicial authorities and administrative authorities, in order to ensure the rights of creditors and their equal treatment in normal insolvency proceedings. In doing so, the resolution authority has particular regard to whether, as a result of the determination under section 62(1), first sentence, point 2, insolvency proceedings might be opened over the assets of the institution or group entity, and makes such arrangements as it considers appropriate to ensure suitable coordination with the courts, judicial authorities and administrative authorities.
(8) Within the period determined under subsection (6), the suspension also extends to the payment or delivery obligations of every counterparty to the contracts affected by the suspension.
(9) A payment or delivery obligation that would have fallen due during the period determined under subsection (6) becomes due immediately upon the expiry of that period.
(10) The resolution authority informs the institution or group entity, and the bodies referred to in section 140(1) and (2), of the direction of the suspension without delay. That information is given after the determination that the institution or group entity is failing or likely to fail, and before a resolution order is issued. Section 140(5), second and third sentences, applies correspondingly.
(11) The resolution authority publishes the direction of the suspension, together with its conditions and duration, by the means referred to in section 140(4).
(12) Where the resolution authority has directed a suspension, sections 46 and 46g of the Banking Act apply to the institution or group entity affected by the suspension, during the period of the suspension, only with the consent of the resolution authority.
(13) Where the resolution authority directs the suspension, it may, for the period of the suspension, make use of its powers to restrict security interests correspondingly to section 83, and to temporarily suspend termination rights correspondingly to section 84.