State of play, main conclusions, outlook

The EU bank crisis management and deposit insurance framework lays out the rules for handling bank failures. The framework was established after the global financial crisis and it consists of three EU legislative texts (the Bank Recovery and Resolution Directive, BRRD, the Single Resolution Mechanism Regulation, SRMR, and the Deposit Guarantee Schemes Directive, DGSD), acting together with relevant national legislation. The three legislative texts contain clauses mandating the Commission to review their application. This review is also part of the agenda for the completion of the Banking Union, as emphasised in President von der Leyen’s Political Guidelines including through the creation of a European Deposit Insurance Scheme (EDIS) to enhance depositor confidence and through measures for a robust bank resolution and insolvency framework. The main purpose of the review is to increase the effectiveness, proportionality and overall coherence of the framework to manage bank crises in the EU as well as enhance the level of depositor protection, including through the creation of a common depositor protection mechanism in the Banking Union.

Estimated savings and benefits

The main focus of the review is on the overall set-up and functioning of the crisis management and deposit insurance framework, with particular attention paid to smaller/medium sized banks or banks with certain business models and a more equal treatment for depositors. The proposed reform is expected to bring about benefits with respect to the effectiveness of the framework and legal clarity. These are largely the result of the various measures for increasing the harmonisation of certain elements of the framework and for clarifying points, which have led to considerable discussion to achieve agreed interpretations. Their impact on administrative efficiency and cost savings is expected to be indirect and it is not feasible to be estimated.

The Fit for Future Platform has adopted on 10 December 2021 an opinion on Banking Union topic in 2021.

The Platform put forward five suggestions for improvement:

• Suggestion 1: Broadly merging of supervisory and early intervention (EIM = Early Intervention Measures) powers

• Suggestion 2: Clarification of Article 16 DGSD – Periodic information on deposit protection

• Suggestion 3: Revision of Article 32b BRRD – clarification of legal provisions to provide more legal certainty about the management of failed banks for which there is no public interest for resolution

• Suggestion 4: Article 32 (5) BRRD – Improve legal clarity concerning the assessment of the public interest for resolution

• Suggestion 5: Improve the consistency between the DGSD, Payment Services and E-Money Directives and increase the protection of client funds of e-money institutions (EMIs) and payment institutions (PIs)

In its opinion on the completion of the Banking Union and the review of the Crisis Management and Deposit Insurance Framework, the Fit for the Future Platform considers that there is room for improvement to make the framework fit for purpose for all banks, in a proportionate manner, taking into consideration potential impact on depositors’ confidence and on financial stability. The Platform also considers important, given the technical complexity and significance of the objectives pursued with the legislation, to factor in a proper time for allowing the markets and the public authorities to deploy the regulation correctly.

The ongoing back-to-back evaluation and impact assessment on the review Crisis Management and Deposit Insurance Framework and EDIS, is taking into consideration the opinion where relevant and feasible, together with other evidence.