European Parliament to Consider Solvency II Amending Directive at Plenary Session

On 7 June 2012, the European Parliament updated its procedure file on the proposed Directive amending the transposition and application dates for the Solvency II Directive (2009/138/EC). The procedure file indicates that the Parliament will consider the proposed Directive during its plenary session on 3 July 2012. Procedure File.

The European Commission published its legislative proposal for this Directive in May 2012. Legislative Proposal.

European Commission Proposes Measures to Avoid Future Bank Bailouts

On 6 June, the European Commission published a legislative proposal for a Directive designed to avoid future taxpayer bailouts of troubled banks. The proposals aim to ensure authorities will have the means to intervene decisively before problems occur, or if they do occur, to intervene as early as possible. Banks that have deteriorated beyond repair would be partly rescued by unsecured creditors rather than taxpayers. Legislative Proposal.

The proposals include:

  • Preparatory and preventative measures – including recovery plans, resolution plans, powers to address or remove resolvability impediments and intra-group support agreements;
  • Early supervisory intervention;
  • Resolution tools – including selling all or part of a failing firm to another firm, separating “good” assets into a new firm, putting “bad assets” into an asset management vehicle and a “bail-in” tool which involves a firm being recapitalised with creditors having their claims reduced or converted to shares; and
  • Enhanced co-operation between national authorities.

The European Commission intends Member States to finalise their implementing measures for the proposed Directive by 31 December 2014 and apply the measures from 1 January 2015. The bail-in tool should be applied from 1 January 2018. A Law-360 article, with comments from Orrick’s Partner Sam Millar, a regulatory partner in the London office, can be found here.

ESMA Provides Technical Advice on the Level Two Implementation of the Alternative Investment Fund Managers Directive

On 16 November 2011, the European Securities and Markets Authority (“ESMA”) published its final advice to the European Commission (the “Commission”) on possible implementing measures under the Alternative Investment Fund Managers Directive (the “Directive”). Although ESMA’s advice is extensive (over 500 pages), there are some headline issues. There is growing industry concern that ESMA’s advice supports a “strict liability” approach towards depositaries for the acts and omissions of their sub-custodians. The industry is likely to welcome other elements of the advice including ESMA’s proposal that where portfolio or risk management is delegated to an entity outside the EU, that entity need not be subject to regulatory requirements which are identical to those under the Directive.

ESMA’s Technical advice can be read in full by clicking here.