The Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF): Legal Aspects of the Second Main Pillar of the European Banking Union (Fourth - Extended and Fully Updated - Edition)

254 Pages Posted: 6 Oct 2015 Last revised: 18 Jul 2018

See all articles by Christos Gortsos

Christos Gortsos

National and Kapodistrian University of Athens

Date Written: July 3, 2018

Abstract

The fourth edition of the present study contains an extended full update of the framework governing, since 1 January 2016, the Single Resolution Mechanism (‘SRM’) and the Single Resolution Fund (‘SRF’) in the EU, with due reference also to decisions taken in 2017 and 2018 by the Single Resolution Board (‘SRB’). The cut-off date is 28 April 2018.

The study aims to provide a systematic and comprehensive review of the provisions of the legal acts constituting the sources of the SRM and the SRF, which constitute the second main pillar of the European Banking Union (‘EBU’). Its structure has been modified and the text considerably extended. In particular:

(1) Section A reviews the framework of the legal acts which constitute the sources of the EBU, in a historical perspective and on a forward looking basis (new Sub-sections 1 and 3).

(2) The main provisions of the SRM Regulation and of the SRF Agreement are now discussed separately in Section B (ex Section A, under 2-3).

(3) Section C (ex Section B) provides a general overview of this new institutional framework, focusing on the various aspects of the SRB: its legal status, seat and composition, its administrative and management structure, the Appeal Panel, the independence and accountability regime, aspects of liability, and all other relevant provisions (under 1-7, respectively).

(4) Section D (ex Section C) deals with the provisions of the SRMR on resolution planning (under 1), with particular emphasis on those pertaining to the minimum requirement for own funds and eligible liabilities (MREL) (under 2), the TLAC (Excursus) and to early intervention (under 3).

(5) The resolution regime under the SRM Regulation is presented in the further extended Section E (ex Section D), which examines: the objectives and principles of resolution, the resolution procedure, the provisions on write-down and conversion of relevant capital instruments, the framework governing the resolution tools, the cooperation arrangements, as well as the investigatory powers of the SRB and its power to impose penalties (under 1-6, resp.). The 2018 winding-up cases of the ABLV bank and of its subsidiary in Luxembourg are discussed in the Excursus, along with the resolution case of the Banco Popular Español and the winding-up cases of the “V&V” banks of 2017.

(6) Section F (ex Section E) deals with the SRF, and in particular with its constitution, administration, investments, and use under the SRM Regulation (under 1), and the specific provisions of the SRF Agreement (under 2). The current proposals for the establishment of a credible and lasting “common backstop” to the SRB for the SRF are also discussed in the Excursus.

(7) The concluding remarks and the assessments complete the study.

Keywords: European Banking Union, SRM, SRF, SRB, preparation for resolution, MREL, TLAC, resolution objectives, powers and tools, NCWO principle, bail-in, precautionary recapitalisation, winding-up

JEL Classification: G01, G21, G28, G33, K23, K33, N20, N24

Suggested Citation

Gortsos, Christos, The Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF): Legal Aspects of the Second Main Pillar of the European Banking Union (Fourth - Extended and Fully Updated - Edition) (July 3, 2018). Available at SSRN: https://ssrn.com/abstract=2668653 or http://dx.doi.org/10.2139/ssrn.2668653

Christos Gortsos (Contact Author)

National and Kapodistrian University of Athens ( email )

Akadimias 45
Athens, 10672
Greece

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