On Wednesday 29 November, the European Court of Auditors found no anomalies in the financial provisioning of the Council of the European Union, the European Commission and the Single Resolution Board (SRB), the European authority responsible for resolving the large failing banks within the banking union, provisioning intended, in particular, to deal with any judicial decisions overturning decisions taken in connection with the banking resolution process.
At the close of their 2022 accounts in June 2023, the Single Resolution Board (SRB), the European Commission and the EU Council had not made any financial provision to deal with any judicial decisions at European and/or national level ordering them to compensate shareholders and creditors who have suffered losses in the context of a bank resolution.
On the other hand, the SRB has increased from €8.1 million in 2021 to €1.9 billion in 2022 its financial commitments that could potentially be mobilised in the event of convictions in the 86 legal proceedings underway at EU level, in which major banks are challenging the SRB’s decision setting their annual contribution to the Single Resolution Fund (SRF).
In 2022, total bank contributions to the SRF amounted to €14 billion (see EUROPE 12989/16, 13217/24).
Despite the difficulty of determining the outcome of ongoing legal proceedings, the European Court of Auditors has not identified any material misstatements in the financial provisioning of the EU institutions and bodies responsible for banking resolution at European level. Nevertheless, it states that the SRB should strengthen its control systems to better document its reasoning on cases pending before the Court of Justice of the EU where it believes that the likelihood of having to disburse funds is low.
Last week, the Court of Justice of the EU definitively rejected six appeals following the resolution of Banco Popular, confirming that the shareholders of the resolved Spanish bank would not have received better treatment if it had been liquidated at national level (see EUROPE 13298/27). This judgment confirms the Court of Auditors’ analysis.
To see the report by the European Court of Auditors: https://aeur.eu/f/9u0 (Original version in French by Mathieu Bion)