Common use of Resolution Instruments Clause in Contracts

Resolution Instruments. The measures available in respect of a financial institution subject to resolution procedures (in Finnish: kriisihallinto) include the power and obligation on the Financial Stability Authority, in order to cover losses of the distressed financial institution, to write down or convert capital instruments (shares or other equity) in the institution. The resolution instruments (in Finnish: kriisinratkaisuvälineet) available to the resolution authority under the Finnish Resolution Laws include the powers to: (a) a) enforce bail-in – the resolution authority has the power to write down certain claims of unsecured creditors of the distressed financial institution and to convert certain unsecured debt claims to equity (the general bail-in tool, in Finnish: velkojen arvonalentaminen ja muuntaminen). Such equity could also be subject to any future write-down. This applies also to derivatives314, save for that the resolution authority may exercise the write-down and conversion powers in relation to a liability arising from a derivative contract only upon or after closing out (termination and netting) the derivative contract (i.e., on a net basis). As such, upon entry into resolution, the resolution authority shall be empowered to terminate and close out any derivative contract for that purpose.