7.3.1.2 Competences in restructuring under the resolution framework

As discussed in section 7.2, two forms of restructuring can be distinguished under the resolution framework. The first entails the restructuring on the basis of the business reorganisation plan when the bail-in tool is applied. The business reorganisation plan is drawn up by the bank and assessed by the resolution authority in agreement with the competent authority. If the resolution authority and the competent authority are satisfied that the plan would restore the long-term viability of the bank, the resolution authority approves the plan. If the resolution authority is not satisfied that the plan would restore the long-term viability of the bank, it can require amendments to be made.1

Within the SRM, the objectives and minimum content of the business reorganisation plan are established within the resolution scheme.2 The national resolution authority submits the business reorganisation plan that it receives from the management body or appointed person(s) to the SRB. The SRB subsequently assesses within one month from the date of submission of the business reorganisation plan, the likelihood that the plan, if implemented, will restore the long term viability of the bank. The assessment is completed in agreement with the national competent authority or the ECB, where relevant. When the SRB is satisfied that the plan will achieve that objective, it allows the national resolution authority to approve the plan. Otherwise, it instructs the national resolution authority to notify the management body or person(s) appointed of its concerns and that it requires amendment. The management body or person(s) appointed subsequently have two weeks to amend the plan in order to obtain the required approval.3 In case of ‘less significant’ banks and banking groups that are not directly supervised by the ECB or are not pan-European banking groups, no endorsement from the SRB is required.4 The national resolution authorities however closely coordinate with the SRB.5

The second form of restructuring entails the ex ante restructuring as discussed in section 7.2.1.3. The competent authority, whether this is the national competent authority or the ECB (within the SSM), can direct a bank to take certain measures in case a revised recovery plan does not adequately remedy the deficiencies or potential impediments identified and a bank fails to make changes in that respect.6

In addition, the national resolution authority can take alternative measures to remove impediments to resolvability.7 Within the SRM, the national resolution authority acts on the instruction of the SRB unless it concerns ‘less significant’ banks and banking groups that are not directly supervised by the ECB or are not pan-European banking groups.8