Retail investor protections under the Bank Recovery and Resolution Directive 2

Investment Firms

Date: 31 January 2022

Firms are reminded that S.I No.713/2020 – European Union (Bank Recovery and Resolution) (Amendment) Regulations 2020 (‘the BRRD 2 Regulations’) sets out obligations relating to the sale of certain ‘bail-inable instruments’ under the BRRD 2[1].  Investment firms (and other sellers, including retail intermediaries) must comply with the requirement that a ‘relevant instrument’ with a denomination of less than €100,000 must not be sold to a retail client in the State. This includes eligible liabilities which meet all of the conditions referred to in the Capital Requirements Regulation (CRR), Additional Tier 1 or Tier 2 instruments but does not include ordinary shares regardless of whether such shares are recognised in Common Equity Tier 1, Additional Tier 1 or Tier 2 capital. Firms should consult the BRRD 2 Regulations for the precise scope, but the scope does include subordinated instruments and non-preferred senior unsecured debt instruments, including instruments such as contingent convertible bonds.  Investment firms (and other sellers, including retail intermediaries) should ensure that they comply with the BRRD 2 Regulations.   Further information can be found in the update included in the November 2021 edition of the Central Bank’s Intermediary Times.


[1] BRRD 2 refers to the provisions that have been introduced to Directive 2014/59/EU (BRRD) by Directive 2019/879/EU (BRRD 2)