7.4.3 Co-existence of burden-sharing requirements

As stated by Gardella, the legal discipline of burden-sharing pertains both to the resolution framework, as it affects its financing side and the principle of internalization of losses, and to the State aid regime, given the potential involvement of public support measures. Prior to the adoption of the resolution framework, the burden-sharing criteria were shaped by the State aid regime under the application of the burden-sharing principle. This principle was subsequently transposed in a hard law requirement under the resolution framework, as this was conceived to be insufficient by the Member States (in particular, Germany). After the adoption of the resolution framework, the coexistence of the two frameworks requires their interaction to be examined with a view to assessing the internal consistency of EU law and to come to a clear understanding of the procedure to be followed by the resolution authorities,1 especially when public funding is involved. This section therefore sheds further light on the co-existence of the burden-sharing requirements under the State aid regime for the banking sector and the resolution framework further to the discussion thereof in sections 7.4.1 and 7.4.2.

Grünewald describes that the shift towards privately-funded bank resolution not only followed the international trend, it also became an actual ‘game changer’ in the negotiations on the European Banking Union, as it alleviated Member States’ fears of heightened fiscal transfers.2