rec_5

(5) The TLAC standard requires G-SIIs to meet the TLAC minimum requirement, with certain exceptions, with subordinated liabilities that rank in insolvency below liabilities excluded from TLAC (‘subordination requirement’). Under the TLAC standard, subordination is to be achieved through the legal effects of a contract (known as contractual subordination), the laws of a given jurisdiction (known as statutory subordination) or a given corporate structure (known as structural subordination). Where required by Directive 2014/59/EU, institutions falling within the scope of that Directive should meet their firm-specific requirement with subordinated liabilities so as to minimise the risk of legal challenge by creditors, on the basis that the creditors’ losses in resolution are greater than the losses that they would have incurred under normal insolvency proceedings (the no-creditor-worse-off principle).

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Source: EUR-Lex (Cellar) · retrieved 2026-10-19 · Text as adopted (Official Journal); later amendments are not incorporated in this text.