The chair of the Single Resolution Board (SRB), Elke Koenig, said on Tuesday 11 July that the European rules in force on the resolution of a failing bank had passed their first tests in Spain and Italy, but that there was still room for them to be improved.
While the first resolution decision – Banco Popular – has proven the effectiveness of the EU resolution framework, we also identified some areas for improvement”, Koenig told a public hearing at the European Parliament. The bank rescue operations in Spain and Italy did not lead to any contagion effects on the markets and safeguarded savers’ deposits. Koenig was echoing the position voiced the day before by the president of the Eurogroup (see EUROPE 11827).
The chair of the European authority said that the Commission’s communication in 2013 on the restructuring of banks in crisis should be reviewed and checked against the new European banking resolution framework. This communication does not provide for a full bail-in, she observed, unlike the 'BRRD' directive on bank resolution.
In the case of the liquidation of two Venetian banks, the SRB considered that these operations did not call for resolution action at European level, leaving it up to the Italian authorities to liquidate the two banks in line with the national insolvency rules and in respect of the European State aid rules.
Koenig went on to highlight the considerable advantages of having rules that make it possible to impose a moratorium on all financial commitments of a bank that is being resolved, an instrument that was not available in Spain when Banco Popular was resolved. Detailed information giving a clear idea of the situation of a failing bank is critical, as is sufficient liquidity to finance an operation and, if necessary, good cross-border cooperation with third countries.
Ramon Tremosa i Balcells (ALDE, Spain) asked Koenig what she feels are the main differences between the Spanish and Italian cases. The former president of BaFin replied by saying that it was in the public interest to resolve Banco Popular, as its credit portfolio focused on SMEs. The SRB additionally published the public part of the resolution decision made regarding the Spanish bank. As for the Italian banks, which had lost many of their customers, they could be replaced by other players and were not interconnected with other financial institutions.
In reply to Pervenche Berès (S&D, France), who asked her about the importance of finalising banking union in the Eurozone, Koenig said that the Nineteen should move forward the work on reducing and sharing financial risks in parallel. (Original version in French by Mathieu Bion)