Brussels, 11/03/2015 (Agence Europe) - At the meeting of the Ecofin Council on Tuesday 10 March, the European Commission told the member states that it considers the current situation, in which just four member states have fully transposed the 'BRRD' directive on banking resolution, to be “unsatisfactory”.
As of 1 March, Germany, Austria, Slovakia and the United Kingdom had notified the European institution of their measures to transpose the directive (2014/59) governing the recovery and resolution ordered against failing banks, whilst continuing their essential operations (payments, deposits).
Since January 2015, the provisions of the directive on the constitution of national resolution funds and the drafting of resolution plans ('living wills') by the banks together with the competent national authority have been applicable, amongst others (see EUROPE 11224). The provisions on the bail-in, which requires losses to be absorbed first of all by the shareholders and creditors of a failing bank before making use of public money, will not apply until January 2016.
The Commission argues that the delay in the transposition of the 'BRRD' directive creates legal uncertainty and could undermine the “credibility” of banking union in the eurozone. In late January, the European institution lost no time in opening infringement proceedings against the 18 countries which have failed to notify it of any transposition measures and six others which have notified only some. It also aims to support the member states in their transposition exercises, by means of dedicated workshops.
By 2016, between 30 and 40 implementing measures of the 'BRRD' must have been adopted, either in the form of delegated acts (e.g. critical functions, exemption from the bail-in, ex post contributions to the single resolution fund), or in the form of technical standards (e.g. MREL).
Tuesday's Ecofin Council took stock of the setting in place of the 'resolution' plank of banking union. The single resolution board (SRB), the European agency which will oversee the resolution of failing systemic banks from 2016, with the use, if required, of the single resolution fund (SRF), will hold its first executive and plenary sessions in March. Over the course of 2015, it will negotiate a cooperation agreement with the ECB, in its capacity as European supervisor of 123 systemic banks in the eurozone, and and an information exchange agreement with the European Parliament (see EUROPE 11267).
Working with the Commission and the Council, the SRB will also develop specific procedures for when the Commission examines a resolution plan with regard to the rules on State aid and when a controversial resolution plan is brought before the board for its position.
IGA. It is worth noting that so far, two countries of the eurozone, Latvia and Slovakia, have ratified the intergovernmental agreement (IGA) partially underpinning the SRF fund, which will have an envelope of €55 billion following a transitional period of eight years (see EUROPE 11084). The ratification of this instrument by the countries of the eurozone, by early 2016, is vital to allow the 'resolution' plank of banking union to be fully operational. (Mathieu Bion)