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resolution exposure
Term Definition Legal instruments

resolution liabilities

29/06/2018

THIS DEFINITION ONLY APPLIES TO THE LARGE EXPOSURES PART

means liabilities that meet the following criteria:

(a) the instrument that creates the liabilities must be issued and fully paid up;

(b) the liabilities are not secured or guaranteed by, the firm, its parent undertaking or any subsidiaries of the firm or its parent undertaking;

(c) the liabilities have a minimum effective remaining maturity of one year (where liabilities include an incentive to redeem, the maturity date shall, for the purposes of determining eligibility, be considered to be the date at which the incentive arises);

(d) the liabilities do not depend on derivatives for their value (put or call options will not in and of themselves be sufficient to disqualify a liability for this purpose absent any other dependency on derivatives);

(e) the liabilities are not subject to contractual set-off or netting arrangements;

(f) the liabilities are able to absorb losses and recapitalise the issuer of the liability, such as through being written down and/or converted to equity, without the use of stabilisation or resolution powers at the level of the issuer of the liability;

(g) the liabilities are subordinated to the operating liabilities of the issuer; and 

(h) the liabilities do not take the form of equity.