Proportionality at the Resolution Stage: Calibration of Resolution Measures and the Public Interest Test

The Principle of Proportionality and Its Applicability in EU Banking Regulation, February 2017

23 Pages Posted: 23 Jun 2017 Last revised: 4 Jul 2017

See all articles by Jens-Hinrich Binder

Jens-Hinrich Binder

Eberhard-Karls-University - Faculty of Law

Date Written: July 3, 2017

Abstract

By their very nature, resolution actions under the legal framework for the management of bank insolvencies created by the European Bank Recovery and Resolution Directive (BRRD) and the Regulation establishing the Single Resolution Mechanism (SRMR) come with infringements of rights of shareholders and creditors. Just as any expropriation of private property by public authorities, resolution actions therefore have to comply with the principle of proportionality, as required by the applicable provisions of the EU Charter on Human Rights and the European Convention of Human Rights. Analysing parallels and differences between general insolvency law on the on hand and the special resolution framework on the other hand, the present Chapter explores the functions and operationalisation of the principle of proportionality in bank resolution. Special attention is given to the ‘public interest test’ which, as part of the statutory ‘conditions for resolution’ under both the BRRD and the SRMR translates general proportionality considerations into a clear-cut set of requirements designed to prevent the application of the resolution tools to cases that do not give rise to systemic stability considerations.

Keywords: Bank Resolution, BRRD, Single Resolution Mechanism, Proportionality

JEL Classification: G01, G15, G18, G21, G24, G33, K19, K22, K23, L22

Suggested Citation

Binder, Jens-Hinrich, Proportionality at the Resolution Stage: Calibration of Resolution Measures and the Public Interest Test (July 3, 2017). The Principle of Proportionality and Its Applicability in EU Banking Regulation, February 2017. Available at SSRN: https://ssrn.com/abstract=2990379

Jens-Hinrich Binder (Contact Author)

Eberhard-Karls-University - Faculty of Law ( email )

Geschwister-Scholl-Platz
Tuebingen, 72074
Germany
++49-(0)-7071-29-76119 (Phone)
++49-(0)-7071-29-35283 (Fax)

HOME PAGE: http://www.jura.uni-tuebingen.de/professoren_und_dozenten/binder

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