Moody's: Germany's adoption of EU BRRD clarifies treatment for grandfathered debt and institutional protection schemes

Frankfurt am Main, November 28, 2014 -- With today's upper house approval, Germany (Aaa stable) is the first European Union country to transpose the EU's Bank Recovery and Resolution Directive (BRRD) into national law. The law will apply in Germany as of 1 January 2015, and notably includes the introduction of the bail-in tool a full year before BRRD's required deadline, says Moody's Investors Service. The adaptation into German law -- the implementation law (BRRI) -- reflects the BRRD's stipulations, but also presents clarifications and interpretations that apply domestically, reflecting the specifics of its banking system (for example, banks in public ownership hold almost 40% of total system assets). This is perhaps most visible in the extra guidance the BRRI provides on the protection of guarantees for "grandfathered debt" issued by public-sector institutions before 19 July 2005.

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