What changed between the draft committee report and the plenary report

Added:(19b) If a DGS has received liquidity support from the DIF or via mandatory lending from other participating DGSs, that liquidity support should be repaid within six years in accordance with a clear repayment plan and as a matter of priority for the DGS that received the liquidity support. Repaying the liquidity support within the agreed timeframe should take priority over all other liabilities of the DGS that are not outstanding at the moment of the provision of the liquidity support. It is the legal responsibility of the participating DGS to meet and maintain both the target level of the DGS and of the DIF.

Removed:(21) Safeguards should be built into EDIS so as to limit moral hazard risk and to ensure that the coverage by EDIS is only provided where nationals DGSs act in a prudent manner. Firstly, national DGSs should comply with their obligations under this Regulation, the Directive 2014/49/EU and other relevant EU law, in particular their obligation to build up their funds in accordance with Article 10 of Directive 2014/49/EU as further specified in this Regulation. In order to benefit from coverage by EDIS, participating DGSs need to raise ex-ante contributions in accordance with a precise funding path. This also implies that the possibility of a target level reduction in accordance with Article 10(6) of Directive 2014/49/EU is no longer available if the DGS wants to benefit from EDIS. Secondly, in case of a pay-out event or where its funds are used in resolution, a national DGS should bear a fair share of the loss themselves. It should therefore be required to collect ex-post contributions from its members to replenish its fund and to repay EDIS to the extent that the initially received funding exceeds the share of loss to be borne by EDIS. Thirdly, following a pay-out event, the national DGS should maximise the proceeds from the insolvency estate and repay the Board and the Board should have sufficient powers to safeguards its rights. Fourthly, the Board should have the powers to recover all or part of funding in case of a participating DGS did not comply with key obligations.

Added:(19c) In order to ensure that participating DGSs continue to have the same terms for using financial means in their DGS fund, no interest is charged for any liquidity support up to the amount of their contributions to the DIF. However, to ensure incentives for repayment, interest is charged and progresses for any liquidity support exceeding those contributions.

Removed:(22) The Deposit Insurance Fund is an essential element without which the progressive establishment of EDIS could not be achieved. Different national systems of funding would not provide for homogenous deposit insurance across the Banking Union. Throughout the three stages, the Deposit Insurance Fund should help ensuring the stabilising role of DGSs, a uniform high level of protection to all depositors in a harmonised framework throughout the Union and avoiding the creation of obstacles for the exercise of fundamental freedoms or the distortion of competition in the internal market due to different levels of protection at national level.

Added:(19d) To avoid moral hazard, the Commission should be able to disqualify participating DGS from being eligible for liquidity support if the participating DGS does not comply with certain obligations or acts counter to the principle of sincere cooperation.

Removed:(23) The Deposit Insurance Fund should be financed by direct contributions from banks. Decisions taken within the EDIS, requiring the use of the Deposit Insurance Fund or of a national deposit guarantee scheme should not impinge on the fiscal responsibilities of the Member States. In that regard, only extraordinary public financial support should be considered to be an impingement on the budgetary sovereignty and fiscal responsibilities of the Member States.

Added:▌

Removed:(24) This Regulation establishes the modalities for the use of the Deposit Insurance Fund and the general criteria to determine the fixing and calculation of ex ante and ex post contributions and lays down the powers of the Board for using and managing the Deposit Insurance Fund.

Added:(23) The Deposit Insurance Fund is an essential element without which the ▌establishment of EDIS I could not be achieved. Different national systems of funding would not provide for homogenous deposit insurance across the Banking Union. The Deposit Insurance Fund should help ensuring the stabilising role of DGSs, a uniform high level of protection to all depositors in a harmonised framework throughout the Union and avoiding the creation of obstacles for the exercise of fundamental freedoms or the distortion of competition in the internal market due to different levels of protection at national level.

Removed:(25) Contributions would be directly levied on banks to finance the Deposit Insurance Fund. The Board would collect the contributions and administer the Deposit Insurance Fund, while national DGSs would continue to collect national contributions and administer national funds. In order to ensure fair and harmonised contributions for participating banks and provide incentives to operate under a model which presents less risk, both contributions to EDIS and to national DGS should be calculated on the basis of covered deposits and a risk-adjustment factor per bank. During the re-insurance period the risk-adjustment factor should consider the degree of risk incurred by a bank relative to all other banks affiliated to the same participating DGS. Once the stage of co-insurance is reached, the risk-adjustment factor should consider the degree of risk incurred by a bank relative to all other banks established in the participating Member States. This would ensure that, overall, EDIS is cost-neutral for banks and national DGSs and avoid any redistribution of contributions during the build-up phase of the Deposit Insurance Fund.

Added:(24) The Deposit Insurance Fund should be financed by transfers from participating DGSs of contributions collected from banks. The use of the Deposit Insurance Fund ▌should not impinge on the fiscal responsibilities of the Member States. In that regard, only extraordinary public financial support should be considered to be an impingement on the budgetary sovereignty and fiscal responsibilities of the Member States.

Removed:(26) In principle, contributions should be collected from the industry prior to, and independently of, any deposit insurance action. When prior funding is insufficient to cover the losses or costs incurred by the use of the Deposit Insurance Fund, additional contributions should be collected to bear the additional cost or loss. Moreover, the Deposit Insurance Fund should be able to contract borrowings or other forms of support from credit institutions, financial institutions or other third parties in the event that the ex-ante and ex post contributions are not immediately accessible or do not cover the expenses incurred by the use of the Deposit Insurance Fund in relation to deposit insurance actions.

Added:▌

Added:(26) ▌The Board would ▌administer the Deposit Insurance Fund that should be financed from contributions collected from banks and transferred to the DIF by the participating DGSs. Participating DGSs would continue to collect ▌contributions and administer national funds. In order to ensure fair and harmonised contributions for participating banks and provide incentives to operate under a model which presents less risk, both contributions to EDIS I and to participating DGS should be calculated on the basis of covered deposits and a risk-adjustment factor per bank. The risk-adjustment factor for contributions to the Deposit Insurance Fund should consider the degree of risk incurred by a bank relative to all other banks in the scope of EDIS I.

Added:(26a) After three years, 50% of the target level of the participating DGS should be transferred to the DIF. The Board should ensure that the contributions are transferred and spread out evenly. In the event that the participating DGS does not have sufficient financial means, the Board should draw up a plan to to ensure that the amounts due from that participating DGS are transferred to the DIF within six years. It is the legal responsibility of the participating DGS to meet and maintain both the target level of the DGS and of the DIF.

Added:(27) The Deposit Insurance Fund should be able to contract borrowings or other forms of support from credit institutions, financial institutions or other third parties along with recourse to mandatory lending in the event that the funds available in the Deposit Insurance Fund are not sufficient for the requested liquidity support. Such alternative funding means for the Deposit Insurance Fund should be enhanced in a manner that optimises the cost of funding and preserves the creditworthiness of the Deposit Insurance Fund. Immediately after the entry into force of this amending Regulation, the necessary steps should be taken by the Board in cooperation with the participating Member States to develop the appropriate methods and modalities permitting the enhancement of the borrowing capacity of the Deposit Insurance Fund that should be in place by the date of application of this amending Regulation.

(28) In order to reach a critical mass and to avoid pro-cyclical effects which would arise if the Deposit Insurance Fund had to rely solely on ex post contributions in a systemic crisis, it is indispensable that the ex-ante available financial means of the Deposit Insurance Fund amount at least to a certain minimum target level.

Change 12

Changed:(28) The initial and(29) finalThe▌ target level of the Deposit Insurance Fund should be established as a percentage of the total minimum target levels of participating DGS. It should progressively reach 20% of four ninth of the total minimum target levels by the end of the reinsurance period and the sum of all minimum target levels by the end of the co-insurance period. The▌The possibility to apply for approval to authorise a lower target level in accordance with Article 10(6) of Directive 2014/49/EU should not be considered when setting the initial or final target▌target levels of the Deposit Insurance Fund. An appropriate time frame should be set to reach the target level for the Deposit Insurance Fund. The setting of that timeframe should not prevent a national DGS from granting a deferral for the transfer of contributions following an intervention.

Change 13

Removed:(29) Ensuring effective and sufficient financing of the Deposit Insurance Fund is of paramount importance to the credibility of EDIS. The capacity of the Board to contract alternative funding means for the Deposit Insurance Fund should be enhanced in a manner that optimises the cost of funding and preserves the creditworthiness of the Deposit Insurance Fund. Immediately after the entry into force of this Regulation, the necessary steps should be taken by the Board in cooperation with the participating Member States to develop the appropriate methods and modalities permitting the enhancement of the borrowing capacity of the Deposit Insurance Fund that should be in place by the date of application of this Regulation.

Added:(29a) In order to ensure the availability of liquidity support as from the entry into force of this amending Regulation, a proportionally higher amount of funds in participating DGSs should be available for mandatory lending during the build-up period of the DIF.

Removed:(30) It is necessary to ensure that the Deposit Insurance Fund is fully available for the purpose of ensuring the guarantee of deposits. Therefore, the Deposit Insurance Fund should primarily be used for the efficient implementation of deposit guarantee requirements and actions. Furthermore, it should be used only in accordance with the applicable deposit guarantee objectives and principles. Under certain conditions, the Deposit Insurance Fund could also provide funding where the available financial means of a DGS are used in resolution in accordance with Article 79 of this Regulation.

Added:▌

(32) In order to protect the value of the amounts held in the Deposit Insurance Fund, those amounts should be invested in sufficiently safe, diversified and liquid assets.

(33) Where close cooperation with the ECB of a participating Member State whose currency is not the euro is terminated in accordance with Article 7 of Regulation (EU) No 1024/2013, a fair partition of the cumulated contributions of the participating Member State concerned should be decided taking into account the interests of the participating Member State concerned and the Deposit Insurance Fund.

Change 14

Changed:(33)(34) In order to guarantee its full autonomy and independence when undertaking deposit insurance actions under this Regulation, the Board should have an autonomous budget with revenues from obligatory contributions collected from the institutions in the participating Member States. This Regulation should be without prejudice to the ability of Member States to levy fees to cover the administrative expenses of their national DGSs or designated authorities.

Change 15

Changed:(34)(35) The Board, where all the criteria relating to the use of the Deposit Insurance Fund are met, should provide the relevant funding and lossliquidity coversupport to the nationalparticipating DGS.

Change 16

Changed:(35)(36) The Board should operate in joint-plenary, plenary and executive sessions. The Board, in its executive session, should prepare all decisions concerning pay-outprovision proceduresof liquidity and, to the fullest extent possible, adopt those decisions. Regarding the use of the Deposit Insurance Fund, it is important that there is no first-mover advantage and that the outflows of the Deposit Insurance Fund are monitored. Once▌Once the net accumulated use of the Deposit Insurance Fund in the previous consecutive 12 months reaches the threshold of 25% of the final target▌target level, the plenary session should evaluate the application of the deposit insurance actions or the participations in resolution actions and the use of the Deposit Insurance Fund, and should provide guidance which the executive session should follow in subsequent decisions. Guidance to the executive session should, in particular, focus on ensuring the non-discriminatory application of deposit insurance actions or participation in resolution actions, on measures to be taken to avoid a depletion of the Deposit Insurance Fund.

Change 17

Changed:(36)(37) The efficiency and uniformity of deposit insurance actions should be ensured in all of the participating Member States. For that purpose, where a participating DGS has not applied or has not complied with a decision by the Board pursuant to this Regulation or has applied it in a way which poses a threat to any of the deposit insurance scheme's objectives or to the efficient implementation of the deposit insurance action, the Board should be empowered to order any necessary action which significantly addresses the concern or threat to the EDIS I objectives. Any action by a participating DGS that would restrain or affect the exercise of powers or functions of the Board should be excluded.

(38) When making decisions or taking actions, in particular regarding entities established both in participating Member States and in non-participating Member States, possible adverse effects on those Member States, such as threats to the financial stability of their financial markets, and on the entities established in those Member States, should also be taken into consideration.

Change 18

Removed:(38) The Board, the designated authorities, the competent authorities, including the ECB, and the resolution authorities should, where necessary, conclude a memorandum of understanding describing in general terms how they will cooperate with one another in the performance of their respective tasks under Union law. The memorandum should be reviewed on a regular basis.

Added:▌

(40) The relevant entities, bodies and authorities involved in the application of this Regulation should cooperate with each other in accordance with the duty of sincere cooperation enshrined in the Treaties.

Change 19

Removed:(40) The Board and the designated authorities and competent authorities of the non-participating Member States should also conclude memoranda of understanding describing in general terms how they will cooperate with one another in the performance of their tasks under Directive 2014/49/EU. The memoranda of understanding could, inter alia, clarify the consultation relating to decisions of the Board that have effect on branches located in the non-participating Member States, where the credit institution is established in a participating Member State. The memoranda should be reviewed on a regular basis.

Added:▌

(42) The procedure relating to the adoption of decisions by the Board respects the principle of delegation of powers to agencies as interpreted by the Court of Justice of the European Union.

(43) This Regulation respects the fundamental rights and observes the rights, freedoms and principles recognised in particular by the Charter, and, in particular, the right to property, the protection of personal data, the freedom to conduct a business, the right to an effective remedy and to a fair trial and the right of defence, and should be implemented in accordance with those rights and principles.

(44) Since the objectives of this Regulation, namely setting up a more efficient and effective deposit guarantee framework and ensuring the consistent application of deposit guarantee rules, cannot be sufficiently achieved by the Member States but can rather be better achieved at the Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

Change 20

Changed:(44)(45) The Commission should review the application of this Regulation in order to assess its impact on the internal market and to determine whether any modifications or further developments are needed in order to improve the efficiency and the effectiveness of the EDIS I. The review should be conducted independently from any assessment of the necessity of a fully-fledged EDIS.

Change 21

Removed:(45) In order for EDIS to function in an effective manner as of [….], the provisions concerning the payment of contributions to the Deposit Insurance Fund, the establishment of all the relevant procedures and any other operational and institutional aspects should apply from XX.

Added:(45a) The Commission should continuously review the appropriateness of extending EDIS I from the provision of liquidity support to the establishment of a full insurance scheme with loss coverage. The Commission should consider the treatment of institutional protection schemes, changes to the general DGS target level, convergence of contributions to the DIF and the need for a publicly funded backstop mechanism. Sufficient progress on the NPL (non-performing loans) framework and an asset quality review of less significant institutions should be a condition for making any legislative proposals.

Removed:(46) Regulation (EU) No 806/2014 should be amended to incorporate and respectively take into account the establishment of EDIS,

Added:(45b) This amending Regulation sets out a clear path to complete the long overdue banking union. Apart from the completion of EDIS, there are interconnected and incomplete legislative building blocks of the internal market for banking which should be assessed. The Commission should consider amending the capital and liquidity waivers and the level of application of the output floor in Regulation (EU) No 575/2013 of the European Parliament and of the Council, as well as progress on legislation and reviews on risk reduction and the diversification of banks’ sovereign bond holdings and progress on international level on the regulatory treatment of sovereign exposures.

Added:(45c) Conducting the reviews on EDIS I, the completion of EDIS and the completion of the banking union and making associated legislative proposals will result in the completion of the banking union.

Added:(46) In order for EDIS I to function in an effective manner as soon as possible, the provisions concerning the payment of contributions to the Deposit Insurance Fund, the establishment of all the relevant procedures and any other operational and institutional aspects should apply from the date of entry into force of this amending Regulation.

Added:(47) Regulation (EU) No 806/2014 should be amended to incorporate and respectively take into account the establishment of EDIS I,

4 unchanged paragraphs

HAVE ADOPTED THIS REGULATION:

Amendments to Regulation (EU) No 806/2014

Regulation (EU) 806/2014 is amended as follows:

1. the title is replaced by the following:

Change 22

Changed:"REGULATION (EU) No 806/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 July 2014 on a Single Resolution Mechanism and a▌a European Deposit Insurance Scheme and amending Regulation (EU) No 1093/2010";

5 unchanged paragraphs

2. Article 1 is replaced by the following:

“Article 1 Subject matter

1. This Regulation establishes uniform rules and a uniform procedure for the resolution of the entities referred to in Article 2 that are established in the participating Member States referred to in Article 4.

Those uniform rules and that uniform procedure shall be applied by the Single Resolution Board established in accordance with Article 42 (the ‘Board’), together with the Council and the Commission and the national resolution authorities within the framework of the Single Resolution Mechanism (‘SRM’) established by this Regulation. The SRM shall be supported by a Single Resolution Fund (the 'SRF'’).

The use of the SRF shall be contingent upon the entry into force of an agreement among the participating Member States (‘the Agreement’) on transferring the funds raised at national level towards the SRF as well as on a progressive merger of the different funds raised at national level to be allocated to national compartments of the Fund.

Change 23

Changed:2. In addition, this Regulation establishes stage 1 of a European Deposit Insurance Scheme ('EDIS I')▌:I') to operate as a liquidity scheme that ▌provides liquidity to participating deposit guarantee schemes in accordance with Article 41a with the aim of making progress towards the establishment of a full insurance scheme with loss coverage at a later stage, in accordance with Article 94b.

Change 24

Removed:– to operate as a liquidity scheme that ▌provides loans to participating deposit guarantee schemes in accordance with Article 41a, with the aim to make progress to a full insurance scheme with loss coverage at a later stage, following a new Commission proposal;

Added:EDIS I shall be administered by the Board in cooperation with participating DGSs and designated authorities in accordance with Part IIa. EDIS I shall be supported by a Deposit Insurance Fund (the ‘DIF’) and, when needed, by additional loans from the participating DGSs in accordance with Chapter 4."

Removed:▌

Removed:▌