8.6.7 The creation of an integrated restructuring process when EPFS is involved in resolution

When a bank is put in resolution with the assistance of EPFS (e.g. in case the bail-in tool is applied as a ‘going concern’ solution, but see also section 8.6.6) it is confronted with the restructuring process and obligations under the State aid regime for the banking sector and the restructuring process and obligations under the resolution framework. This brings up the question whether it would be possible to apply one integrated restructuring process when a bank is put in resolution with the assistance of EPFS. Taking into account that the business reorganisation plan and the restructuring plan both have the objective of restoring the long-term viability of the bank, it may be possible to combine both plans into one plan. This integrated restructuring plan could then cover the measures to restore the long-term viability of the bank, the measures to limit the distortion of competition and the monitoring arrangements. In addition, as part of the plan, the management body and senior management of the bank should be replaced, except when the retention thereof is considered necessary for the achievement of the resolution objectives. By integrating the restructuring obligations these may be streamlined, while the administrative and regulatory burdens of banks may be alleviated.

If one integrated restructuring plan can be prepared, this also triggers the question whether it would be possible to appoint one authority as the appropriate authority to assess and monitor this plan. In the author’s view, this authority could be the resolution authority (the SRB or the national resolution authorities) or the Commission. While the Commission has extensive experience with the restructuring of banks as a result of its State aid decisions, the resolution authorities have access to the resolution tools and powers. When State aid is involved in the restructuring, this integrated restructuring plan will have to be assessed by the Commission to ensure compliance with the State aid regime for the banking sector. In the author’s view, this assessment could, however, be limited to a check on how the distortion of competition is being prevented, while the resolution authorities will be responsible for the assessment whether the long-term viability of the bank is restored.1 The monitoring could be done by a person or persons appointed by the resolution authority and the Commission together.