One of the lessons learned from the last financial market crisis is that it is of paramount importance to have a dedicated resolution regime for banks so that a framework is in place for dealing with credit institutions that experience financial difficulties without either using taxpayers’ money or endangering financial stability.
The Key Attributes of Effective Resolution Regimes for Financial Institutions (the “Key Attributes”) developed by the Financial Stability Board (FSB) therefore set out a resolution regime for banks. On this basis, the European resolution regime for banks, consisting of the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR), was established.
In Germany, the BRRD was transposed into national law by way of the Recovery and Resolution Act (Sanierungs- und Abwicklungsgesetz, SAG), which entered into force in 2015.
The provisions of the European resolution regime for banks were amended in June 2019 by the EU banking package published in the Official Journal of the European Union – the amended BRRD is to be transposed into national law by end-2020.
The Recovery and Resolution Act follows the structure of the BRRD in that it can be broken down into three core components:
-
Minimum Requirements for the Design of Recovery Plans
-
Treatment of certain liabilities under insolvency law - the new creditor hierarchy
-
The European banking package – revised rules in EU banking regulation
Article in the June 2019 issue of the Monthly Report – the revised resolution framework is intended to improve banks’ resolvability and reduce the risk of public funds being used for bank resolutions.
17.06.2019 | 183 KB, PDF
-
Bank recovery and resolution – the new TLAC and MREL minimum requirements
Article from the Monthly Report July 2016 – In future, it should be possible to resolve banks in an orderly fashion without endangering financial stability and leaving the taxpayer to foot the bill. New standards have been defined at both the global and European levels to ensure the resolvability of institutions in the event of a crisis.
18.07.2016 | 154 KB, PDF
-
Europe's new recovery and resolution regime for credit institutions
Article from the Monthly Report June 2014 – In the EU, two legislative projects have been rolled out to harmonise recovery and resolution tools. This should facilitate the resolution of more complex banks in the future without resorting to tax resources.
16.06.2014 | 186 KB, PDF