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.

The institutional framework governing the resolution of credit institutions within the euro area is Regulation 806/2014, which established a harmonised resolution framework for euro area credit institutions, by creating the Single Resolution Mechanism (SRM).

Overview

Greece

In Greece, the institutional framework for resolution started to be developed in 2011.

In October 2011, Law 4021/2011 amended Law 3601/2007, among other things with regard to bank resolution.

This was followed by Law 4261/2014, which transposed into Greek legislation Directive 2013/36/EU (Capital Requirements Directive – CRD IV), including its provisions on bank resolution.
In 2015, Law 4335/2015 transposed Directive 2014/59/EU (Bank Recovery and Resolution Directive – BRRD) establishing a framework for the resolution of credit institutions in the European Union. 

This was followed by Law 4261/2014, which transposed into Greek legislation Directive 2013/36/EU (Capital Requirements Directive – CRD IV), including its provisions on bank resolution.

In 2015, Law 4335/2015 transposed Directive 2014/59/EU (Bank Recovery and Resolution Directive – BRRD) establishing a framework for the resolution of credit institutions in the European Union.

The European resolution framework: Key milestones

2014: Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (Bank Recovery and Resolution Directive - BRRD)

The financial crisis revealed a significant lack of adequate tools at EU level to deal effectively with unsound or failing credit institutions and investment firms.

The financial crisis revealed a significant lack of adequate tools at EU level to deal effectively with unsound or failing credit institutions and investment firms.

Directive 2014/59/EU provides resolution authorities with a harmonised set of tools to intervene sufficiently early in an institution that has been determined as failing or likely to fail.

The aim is to ensure the continuity of the institution’s critical functions, while minimising the impact of an institution’s failure on the real economy and the financial system.

To ensure timely crisis management in future, the BRRD laid down the following:

  1. A number of instruments and rules for crisis management in three stages:
    • preparatory and preventative measures (such as recovery and resolution plans);
    • early intervention measures;
    • resolution measures.
  2. The establishment of national resolution authorities. 
  3. A European system of financing arrangements (resolution funds).

2014: The Single Resolution Mechanism Regulation (SRM Regulation)

In 2012, it was agreed to take steps towards a banking union,  by developing common tools for micro- and macro-prudential supervision, crisis management and bank resolution across the euro area.

In 2012, it was agreed to take steps towards a banking union,  by developing common tools for micro- and macro-prudential supervision, crisis management and bank resolution across the euro area.

The banking union comprises three pillars:

  • the Single Supervisory Mechanism (SSM);
  • the Single Resolution Mechanism (SRM); and
  • the European Deposit Insurance Scheme (EDIS) (yet to be established).

In 2014, the SRM Regulation established:

  1. the Single Resolution Board (SRB), which is the central resolution authority of the participating Member States. Together with the national resolution authorities (NRAs), it forms the Single Resolution Mechanism (SRM); and
  2. the Single Resolution Fund (SRF).

The SRM Regulation also laid down the powers and responsibilities of the SRB and the national resolution authorities (NRAs), and the general modalities for their cooperation.  

 Content Editor

​The Single Resolution Mechanism (SRM)

The Single Resolution Mechanism is a key element of Europe's banking union and consists of:

  1. The Single Resolution Board
  2. The Single Resolution Fund, funded by the banking sector.

    Its aims are:

    • to strengthen confidence in the banking sector;
    • to prevent bank runs and contagion;
    • to minimise the negative relationship between banks and sovereigns; and
    • to eliminate fragmentation in the internal market for financial services.

The Single Resolution Board

As from 1 January 2016, the Single Resolution Board is responsible, among other things, for drafting the resolution plans for significant banks and other cross-border groups within the euro area. 

As from 1 January 2016, the Single Resolution Board is responsible, among other things, for drafting the resolution plans for significant banks and other cross-border groups within the euro area. It also responsible for the adoption of any resolution measures and for determining the most appropriate actions needed to meet the objectives of the new institutional framework for resolution.

The national resolution authorities, besides their involvement in the above decision making processes, are responsible for resolution planning and taking resolution actions with respect to less significant credit institutions. In addition, they implement all relevant decisions issued by the Single Resolution Board.

The Single Resolution Board (SRB) is the main decision-making body of the Single Resolution Mechanism.

Its main tasks are to:

  • establish standard rules & procedures for the resolution of entities;
  • take decisions on resolution within the Banking Union according to a standard process - this helps maintain market confidence;
  • establish credible & feasible arrangements for resolution;
  • remove obstacles to resolution, to make the banking system in Europe safer;
  • minimise resolution costs & avoid destruction of value unless necessary to achieve the resolution objectives;
  • provide key benefits for taxpayers, banks & deposit-holders; and
  • promote EU-wide financial & economic stability.

The Single Resolution Fund (SRF)

The Single resolution Fund is a fund established at supra-national level. It will be used for resolving failing banks, after other options, such as the bail-in tool, have been exhausted.

The Single resolution Fund is a fund established at supra-national level. It will be used for resolving failing banks, after other options, such as the bail-in tool, have been exhausted.

The Fund is financed by contributions raised from the institutions of the Member States participating in the Single Resolution Mechanism (SRM).  It will be built up over a period of 8 years and by 1 January 2024 its funds must reach at least 1% of the amount of covered deposits of all authorised institutions of the participating Member States. The estimated amount will be approximately €55 billion.

It should be noted that the Fund consists initially of “national compartments”, which will progressively merge during this eight-year transitional period. This is provided for by the Intergovernmental Agreement (IGA) on the transfer and mutualisation of contributions to the Single Resolution Fund.

This Agreement provides for the transfer by the Member States to the SRF of the contributions raised at national level and also includes provisions on the functioning of compartments and the mutualisation of the use of paid-in funds during the transitional eight-year period.

Commission Delegated Regulations regarding BRRD

Find the regulations files below:

Find the regulations files below:

Commission Implementing Regulations regarding BRRD

Find the regulations files below:

Find the regulations files below:

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