The Institutional Framework for Resolution
Greece was one of the first countries in the EU to develop an institutional framework for the resolution of credit institutions, assigning the relevant powers to the Bank of Greece.
In October 2011, Law 4021/2011 (only in Greek) introduced amendments to Law 3601/2007, regarding, among other things, resolution measures for credit institutions. This was followed by Law 4261/2014, which, by transposing Directive 2013/36/EU of the European Parliament and of the Council, of 26 June 2013, on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (Capital Requirements Directive – CRD IV) into Greek law and by including all its resolution-related provisions, became Greece’s comprehensive Banking Law. In 2015, with Law 4335/2015 (only in Greek), transposing Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms (Bank Recovery and Resolution Directive – BRRD), the EU’s framework for the resolution of credit institutions was introduced. As from 1 January 2016, with the entry into effect of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (SRM Regulation), a uniform framework for the resolution of euro area credit institutions was established. Together with the BRRD, the SRM Regulation forms the institutional framework for the resolution of credit institutions in the euro area.
Directive on the Recovery and Resolution of Credit Institutions and Investment Firms (BRRD)
The financial crisis showed a significant lack of adequate tools at EU level to deal effectively with unsound credit institutions and investment firms. This led to the adoption of Directive 2014/59/EU of the European Parliament and of the Council, of 15 May 2014, establishing a framework for the recovery and resolution of credit institutions and investment firms (Bank Recovery and Resolution Directive – BRRD), which provides resolution authorities with a harmonised set of tools to ensure early intervention in an unsound or failing institution so as to ensure the continuity of the institution’s critical functions, while minimising the impact of an institution’s failure on the economy and financial system. The BRRD was transposed into Greek legislation by Article 2 of Law 4335/2015 (only in Greek) in July 2015.
For the achievement of resolution objectives, the BRRD laid down, among other things:
− a range of instruments and rules for crisis management in three stages:
• preparatory and preventative measures;
• early intervention measures;
• resolution measures;
− the creation of National Resolution Authorities;
− a European system of financing arrangements (resolution funds).
The Single Resolution Mechanism Regulation (SRM Regulation)
In 2012, it was agreed at European level to establish a banking union for the purpose of implementing euro area-wide common tools for micro- and macro-prudential supervision crisis management and bank resolution. The banking union comprises three pillars: the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) and the European Deposit Insurance Scheme (EDIS) (not yet established).
With particular regard to bank resolution and with a view to ensuring that the BRRD is consistently implemented across euro area banks, the European Parliament and the Council (during the Greek Presidency) adopted Regulation EU No 806/2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (SRM Regulation).
The SRM Regulation established a Single Resolution Board (SRB), which is the central resolution authority of the participating Member States and together with the national resolution authorities forms the Single Resolution Mechanism (SRM); and a Single Resolution Fund (SRF). It also laid down the powers and responsibilities of the SRB and the national resolution authorities, and the general modalities for their cooperation. As of 1 January 2016, the SRB is responsible, among other things, for drawing up resolution plans and taking resolution measures for significant entities and groups and cross-border banking groups established in the euro area and for identifying the resolution actions that are the most appropriate to achieve the objectives of the new resolution framework. In addition to being involved in the relevant decision-making, the national resolution authorities are responsible for resolution planning and resolution actions in respect of less significant institutions. Also, they implement the decisions of the Single Resolution Board.
The Single Resolution Fund, established by the SRM Regulation, is a supra-national fund intended for use in resolution financing and managed by the Single Resolution Board. The Fund is financed by contributions raised from the institutions of the participating Member States and, by the end of an initial period of eight years, its available financial means should reach at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating Member States (estimated at approximately €55 billion). It should be noted that the Fund will initially consist of national compartments , which will progressively be merged during this eight-year transitional period, in accordance with the intergovernmental Agreement (IGA) (only in Greek) on the transfer and mutualisation of contributions to the Single Resolution Fund. This Agreement, foresees the transfer by the Member States to the SRF of the contributions that they raise at national level and also includes provisions on the functioning of compartments and the mutualisation of their use during the transitional eight-year period.
Delegated Regulations supplementing Directive 2014/59/EU (BRRD)
Implementing Regulations regarding Directive 2014/59/EU (BRRD)
Delegated Regulations related to the SRM Regulation (EU) 806/2014
Implementing Regulations related to the SRM Regulation (EU) 806/2014