The President of the Single Resolution Board (SRB), Elke König, said on Tuesday 26 March that national bank deposit insurance schemes (DIS) should have the possibility to take “alternative measures” to the repayment of investors in order to support a failing bank.
“There is a need to define how far can you go with this alternative measures”, she said in front of a few journalists, not excluding further harmonisation of the European directive that governs the national DISs. She took as an example the American agency FDIC, which is responsible for carrying out a least cost in the event of a bank failure before choosing the most appropriate measure for the circumstances.
According to Ms König, the recent judgement of the EU General Court in the case involving the Fondo Interbancario di Tutela dei Depositi (FITD) is an “opportunity” to discuss the nature of national deposit insurance schemes. In that case, the Court annulled the decision of the European Commission's competition services considering a preventive intervention to support, i. e. excluding liquidation, the Italian fund FITD (see EUROPE 12219/23) as State aid. The Commission can still appeal.
This discussion on the role of national bank deposit insurance schemes could take place as part of the work on the creation of the European Deposit Insurance Scheme (EDIS), the third part of the euro area banking union. In accordance with the mandate of the euro area summit, the EU Council experts are responsible for working on the issue with a view to making a new proposal in June.
Brexit. In view of the United Kingdom's exit from the European Union, the SRB Council is in close contact with the Bank of England to finalise a Memorandum of Understanding (MoU) which should be finalised very soon, no later than a possible no-deal Brexit.
“Financial authorities are working as close as we can to make sure that situation stays manageable”, said Ms König, convinced that “there should be no imminent risk for stability”, although an outright British withdrawal would create volatility.
The President of the European Authority specified that any bank established in London and wishing to relocate activities in the EU must create in the Member State(s) concerned “a fully operational bank” and which is capable of being the subject of a banking resolution.
Barclays Bank has significantly increased its presence in Dublin and several US banks that only had a presence in London are actively working to locate their activities in the EU.
SRF. It should be noted that ex ante payments from national banking systems will enable the Single Resolution Fund (SRF) to be endowed with more than €30 billion in 2019, after having reached €25 billion in 2018. (Original version in French by Mathieu Bion)