Brussels, 16/06/2015 (Agence Europe) - On Tuesday 16 June, the president of the Single Resolution Board (SRB), Elke König, urged the member states to transpose the 'BRRD' directive on the national banking resolution procedures.
“Only two member states have fully ratified the inter-governmental agreement, and there are some more in the making. The BRRD situation does not look much better: seven member states have fully transposed it, some more are expected by the end of June”, König told a hearing before the committee on economic and monetary affairs of the European Parliament.
The SRB Council, which has been in place since 2015, is a new European authority born from banking union in the eurozone. Made up of the competent national authorities, it will be responsible for carrying out the resolution of large failing banks from 2016 (see EUROPE 11284). In order to do this, it will apply the 'BRRD' directive, which came into force this year across the entire European Union, and will have access to the Single Resolution Fund (SRF), which will have a budget of around €55 billion by the end of 2023 and will be based partly on an inter-governmental agreement.
Amongst other things, the 'BRRD' directive requires banks to draw up living wills detailing the measures to be taken in the event of insolvency. From 2016, it will bring in rules for a 'bail-in', establishing a hierarchy between the financial players (shareholders, creditors and savers) whose funds will be used in the event of banking resolution. At the end of May, the Commission noted that 15 member states have not yet transposed this directive (see EUROPE 11324).
König took stock of the process for setting the European authority in place in Brussels. The “main challenge” is recruitment, whilst trying to get to work on the substance, she said. Four specific committees been set up within the SRB Council, with a view to finalising a practical guide to banking resolution by the end of this year. The European authority has also started talks with the ECB, which directly supervises the systemic banks of the eurozone via the single supervision board, with a view to concluding an agreement on information exchange.
Regarding the options to provide the SRF with sufficient resources during its transitional build-up phase, König said that private solutions were “largely unavailable”, as access to the capital markets has been estimated, for instance, at a maximum of €25 billion. The ESRB Council is looking at public options to provide the SRF with bridge financing. However, as König pointed out, the European Stability Mechanism cannot directly contribute. (Mathieu Bion)