The chairman of the Single Resolution Board (SRB), Dominique Laboureix, warned on Thursday 12 September in an article published at the Eurofi conference that overly strict European rules would limit the funding available to resolve failing medium-sized banks within the banking union.
The CMDI legislative package aims to facilitate the resolution of smaller banks by allowing the use, after mobilisation of the shareholders and creditors of the failing bank, of bridging finance from national bank deposit guarantee schemes (DGS) to facilitate access to the Single Resolution Fund (SRF). It will be the subject of interinstitutional negotiations in trilogue between the European Parliament and the Council of the EU (see EUROPE 13437/4).
“It should be clear that, if the funding provided is too limited or its safeguards too complex to satisfy during a resolution weekend, the reform’s impact on financial stability and taxpayer protection may be limited”, warned Mr Laboureix. In particular, he noted that the Council’s position introduced “19 new safeguards restricting access to the new funding” from DGS schemes, making the scheme, if adopted on this basis, “less ambitious”. Without adequate funding for resolution, the liquidation of failing banks and a rescue based on public funds could become the only option, he warned.
See the article by Mr Laboureix: https://aeur.eu/f/dft (Original version in French by Mathieu Bion)