Report on the application and review of Directive 2014/59/EU and Regulation 806/2014

Summary:

Report presented on 30 April 2019 by the European Commission on the application of the Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation.

Background and further information:

The Union regulatory framework in the area of financial services has been developed substantially following the financial crisis. Several pieces of legislation were adopted to introduce rules in previously unregulated areas and to revise existing legislation. The overall aim was to address the concerns and weaknesses which emerged during the financial crisis and to reduce the risk of resurgence of (systemic) crises.

In this context, a minimum EU harmonised legal framework applicable in case of bank crises was introduced in 2014, consisting of the Bank Recovery and Resolution Directive (BRRD). The Single Resolution Mechanism Regulation (SRMR) complements that harmonised framework. These legislative acts provide effective tools to resolve banks that are “failing or likely to fail”. Whereas the BRRD had to be transposed into national law by each EU Member State, the SRMR is a directly applicable regulation which centralises certain resolution functions and decisions for the Banking Union. Hence, both instruments jointly establish the EU resolution framework.

Article 129 of the BRRD and Article 94 of the SRMR require the Commission to review the application of the resolution framework and to submit reports on the application of these legal instruments. Due to the close links between these instruments it is appropriate to carry out the review jointly for both of them.