Brussels, 18/09/2015 (Agence Europe) - The European Commission feels that the draft German law transposing the BRRD Directive (2004/59) on bank resolution and restructuring schemes complies with EU rules.
The directive came into force in January 2015 and introduces a hierarchy of investors for contributions to a bail-in of a failed European bank. From 2016 onwards, shareholders and bank lenders will be the first to have to contribute, followed by private savers holding more than €100,000 and finally, the injection of public money (see EUROPE 11336).
The German draft law would make senior unsecured debt subordinated to other claims (such as derivatives and corporate deposits). It therefore changes the order in which different senior creditors will be bailed in. The ranking between different types of senior unsecured debt is not governed by BRRD (except for deposits of individuals and SMEs which rank higher than other senior unsecured debt). The Commission therefore feels that the German draft law is neither more nor less stringent than BRRD.
Keeping a close eye on changes to legislation in Germany, the French bank supervisory body says that the debt ranking in Germany raises a number of questions, such as increasing senior investors' contributions, reports French business newspaper Les Echos.
Bulgaria has now become the fourteenth member state to transpose the BRRD Directive, the latest member state since the previous tally (see EUROPE 11369). Seven countries have partially transposed the directive, viz. Belgium, Cyprus, Spain, France, Malta, the Netherlands and Slovenia. The Commission has launched a series of infringement proceedings against the latecomers, feeling that the situation is dissatisfactory and a source of legal uncertainty.
Six member states so far (Germany, Cyprus, Finland, France, Latvia and Slovakia) have ratified the intergovernmental agreement upon which the Single Resolution Fund (SRF), the financial arm of resolution under Banking Union, is based. (Mathieu Bion)