1.   Resolution authorities shall determine the loss absorption amount which the institution or group should be capable of absorbing.

2.   For the purpose of determining the loss absorption amount in accordance with this Article and of any contribution of the deposit guarantee scheme to the resolution costs pursuant to Article 6, the resolution authority shall, consistently with Article 45(6) of Directive 2014/59/EU, request from the competent authority a summary of the capital requirements currently applicable to an institution or group, and in particular the following:

(a)

own funds requirements pursuant to Articles 92 and 458 of Regulation (EU) No 575/2013 of the European Parliament and of the Council (4), which include: (i) CET1 capital ratio of 4,5 % of the total risk exposure amount; (ii) a Tier 1 capital ratio of 6 % of the total risk exposure amount; (iii) a total capital ratio of 8 % of the total risk exposure amount;

(b)	any requirement to hold additional own funds in excess of these requirements, in particular pursuant to point (a) of Article 104(1), of Directive 2013/36/EU;

(c)	combined buffer requirements as defined in Article 128(6) of Directive 2013/36/EU;

(d)	the Basel I floor according to Article 500 of Regulation (EU) No 575/2013;

(e)	any applicable leverage ratio requirement.

3.   For the purposes of this Regulation, capital requirements shall be interpreted in accordance with the competent authority's application of transitional provisions laid down in Chapters 1, 2 and 4 of Title I of Part Ten of Regulation (EU) No 575/2013 and in the provisions of national legislation exercising the options granted to the competent authorities by that Regulation.

4.   The loss absorption amount to be determined by the resolution authority shall be the sum of the requirements referred to in points (a) (b), and (c) of paragraph 2, or any higher amount necessary to comply with the requirements referred to in points (d) or (e) of paragraph 2.

5.   The resolution authority may set a loss absorption amount using either of the following methods:

(a)	a loss absorption amount equal to the default loss absorption amount determined in accordance with paragraph 4;

(b)

a loss absorption amount, which may be either: (i) higher than the default loss absorption amount determined pursuant to paragraph (4) where: — the need to absorb losses in resolution is not fully reflected in the default loss absorption amount, taking into account information requested from the competent authority relating to the institution's business model, funding model, and risk profile pursuant to Article 4, or — it is necessary to reduce or remove an impediment to resolvability or absorb losses on holdings of MREL instruments issued by other group entities; (ii) lower than the default loss absorption amount determined pursuant to paragraph (4) to the extent that, taking into account information received from the competent authority relating to the institution's business model, funding model, and risk profile pursuant to Article 4: — additional own funds requirements referred to in paragraph 2(b), which have been determined on the basis of the outcome of stress tests or to cover macroprudential risks, are assessed not to be relevant to the need to ensure losses can be absorbed in resolution, or — part of the combined buffer requirement referred to in paragraph 2(c) is assessed by the resolution authority not to be relevant to the need to ensure losses can be absorbed in resolution.

6.   Where the option in paragraph 5(b) is applied, the resolution authority shall provide the competent authority with a reasoned explanation of the loss absorption amount that has been set, in the framework of the obligation of the resolution authority to consult the competent authority under Article 45(6) of Directive 2014/59/EU.