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Article 3 - Legally binding agreements and commitments between the group entities regarding the undrawn credit or liquidity line

Article 3

Legally binding agreements and commitments between the group entities regarding the undrawn credit or liquidity line

1.   The legally binding agreements and commitments referred to in point (b) of Article 29(2) and in point (b) of Article 34(2) of Delegated Regulation (EU) 2015/61 shall satisfy the following conditions:

(a)

the credit or liquidity line is a committed line which is legally and practically available at any time, for the duration of the facility, even during a period of stress, on a cross-border basis. It is specifically dedicated to the application of the preferential outflow or inflow rate provided for in Articles 29 and 34 of Delegated Regulation (EU) 2015/61 and available on demand. For these purposes, credit institutions have conducted sufficient legal review supported by a written and reasoned legal opinion approved by their management bodies, confirming the legal validity and enforceability of the credit or liquidity line agreement or commitment in all relevant jurisdictions;

(b)

the currency denomination of the committed credit or liquidity line is consistent with the distribution by currency of the net liquidity outflows of the liquidity receiver that are unrelated to the line;

(c)

the amount and the cost of the committed credit or liquidity line are clearly specified in the relevant contract;

(d)

the agreements and commitments do not contain any clause that would allow the liquidity provider to:

(i)

require any conditions to be fulfilled before the liquidity is provided;

(ii)

withdraw from its obligations to fulfil these agreements and commitments;

(iii)

change the terms of the agreements and commitments without prior approval from the relevant competent authorities;

(e)

the credit or liquidity line has a remaining maturity of over six months at all times. If the credit or liquidity line does not have a maturity date, it has a minimum notice period for cancellation of six months.

2.   The legal review referred to in point (a) of paragraph 1 shall be regularly updated to reflect any changes in the laws of all relevant jurisdictions. Competent authorities shall be notified of the outcome of these legal reviews.

3.   The amount of the credit or liquidity line referred to in point (c) of paragraph 1 shall not be revised without the prior consent of the relevant competent authorities.

4.   If the remaining maturity referred to in point (e) of paragraph 1 falls below six months or a notice for cancellation of the credit or liquidity line is given, credit institutions shall immediately notify the relevant competent authorities. Those authorities shall determine whether the preferential outflow or inflow rates continue to apply in accordance with the process referred to in point (b) of Article 20(1) of Regulation (EU) No 575/2013.