Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.7.1.3:4.7.1.3 Removal or replacement of the management body and senior management

Public funding of failing banks in the European Union (LBF vol. 19) 2020/4.7.1.3

4.7.1.3 Removal or replacement of the management body and senior management

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One of the resolution principles is to replace the management body and senior management of the bank, except when the retention thereof is considered necessary for the achievement of the resolution objectives. In accordance with this resolution principle, the resolution power to remove or replace the management body and senior management1 should therefore normally be exercised as part of the restructuring in resolution, unless the retention thereof is considered necessary for the achievement of the resolution objectives.

Resolution authorities may appoint a special manager to replace the management body of the bank in resolution. This is made public by the relevant resolution authority. The special manager may exercise all the powers of the shareholders and the management body of the bank under the control of the resolution authority. The special manager has the statutory duty to take all the measures necessary to promote the resolution objectives and implement resolution actions according to the decision of the resolution authority.2 These measures may include an increase of capital, reorganisation of the ownership structure or takeovers by entities that are financially and organisationally sound.3

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