#2020-1636Amendment to Banking Resolution Framework in France
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This law modifies the bank resolution process in France, impacting savings banks and local affiliates. It requires these institutions to align shareholder practices with central financial management during resolutions or liquidations. The law standardizes liquidation procedures and mandates collaboration between liquidators across central bodies and affiliates. Financial institutions must meet minimum capital requirements to ensure stability, and introduce new hierarchies in creditor repayment processes.
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Key Changes
- Incorporation of available social shares into capital during bank resolutions or liquidations.
- Allocation of a single liquidator for central bodies and affiliates in liquidation cases.
- New hierarchy in creditor repayment, prioritizing eligible liabilities.
Obligations
What this law requires
Savings banks (caisses d'épargne et de prévoyance) and local savings companies must amend their bylaws to provide that during banking resolution or judicial liquidation, net proceeds from social share subscriptions available in current accounts held by local savings companies shall be incorporated into the capital of the savings bank.
A central body (organe central) or its affiliate is declared in a state of payment cessation only after implementation of measures under Article L. 511-31 and when both the central body and all its affiliates are in such a state.
Acts performed by a central body from the date of payment cessation in fulfilling its missions under Article L. 511-31 cannot be annulled, notwithstanding commercial code provisions on annulment of acts during insolvency.
A single liquidator must be designated for the entire group consisting of a central body and all its affiliates, appointed by both the Prudential Control and Resolution Authority and the court, and must implement coordinated liquidation procedures across all entities.
Liquidators must ensure that holders of capital titles and creditors of the same rank or with identical liquidation rights are treated equally and proportionally to their admitted claims across all entities, including central bodies and all affiliates.