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The instrument may be activated in case a bank fails to attract sufficient capital from private sources and if the ESM Member concerned is unable to recapitalise it, including through the instrument of indirect recapitalisation of the ESM.
For a transitional period until 31 December 2015, a bail-in of 8 per cent of all liabilities will be a precondition for using the instrument, as well as the use of the resources available in the ESM Member's national resolution fund. From 1 January 2016, bail-in in line with the rules of the Bank Recovery and Resolution Directive will be required.
The financial assistance will be provided in accordance with EU State aid rules and the ESM Member will be asked to invest alongside the ESM.