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 banks 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: