4.3.6 Resolution fund

Documentgegevens:

mr. drs. R.E. van Lambalgen, datum 01-12-2017

Datum: 01-12-2017
Auteur: mr. drs. R.E. van Lambalgen
JCDI: JCDI:ADS585856:1
Vakgebied(en): Financieel recht / Europees financieel recht
Mededingingsrecht / EU-mededingingsrecht

A key element of the BRRD is the requirement to establish national resolution funds (in the official terminology: “resolution financing arrangements”).1 The main purpose of a resolution fund is to provide liquidity to the bank or bridge institution.2 However, the fund can also be used for recapitalisations: pursuant to Art. 44(4) BRRD the resolution financing arrangement may make a contribution to the bank under resolution. In that regard, Art. 44(5) BRRD sets out a very important restriction: the resolution fund may only make a contribution if the following two conditions are met: i) there is a bail-in of at least 8% (of total liabilities including own funds)3, and ii) the contribution does not exceed 5% (of total liabilities including own funds).

National resolution funds are publicly managed, but they are financed through contributions paid by banks. Pursuant to Art. 103 BRRD (and Art. 70 SRM- Regulation), banks are required to make ex ante contributions to the resolution fund.4 Extraordinary ex post contributions are made possible by Art. 104 BRRD (and Art. 71 SRM-Regulation). The fact that banks have to contribute to the resolution fund contributes to the BRRD’s objective of minimising the cost of taxpayers.

Whereas the BRRD provides for national resolution funds, the SRM provides for the creation of the Single Resolution Fund (SRF). The SRF is financed by bank contributions which are raised at national level and which are transferred to the SRF. The obligation to transfer the bank contributions to the SRF does not follow directly from the SRM-Regulation, but is established in the intergovernmental agreement (IGA5). 6 The SRF will be built up over a period of 8 years (starting at 1 January 2016). The SRF will initially consist of national compartments; the bank contributions are allocated to these national compartments.7 These national compartments will gradually be merged (“mutualised”) over the 8-year transition period.8 The SRF is key to breaking the link between governments and banks. In that regard, the SRF has been called “an essential element without which the SRM could not work properly”.9

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This requirement is laid down in Art. 100 BRRD. The rationale of these resolution financing arrangements is clearly explained in recital 103 of the BRRD.

Art. 101(1) BRRD indicates all the purposes for which resolution financing arrangements may be used. See also Art. 76(1) SRM-Regulation.

Art. 44(8) BRRD provides for an exception to this precondition.

Pursuant to Art. 103(2) BRRD, each bank contributes pro rata to the amount of its liabilities (excluding own funds) less covered deposits, with respect to the aggregate liabilities (excluding own funds) less covered deposits of all the institutions authorised in the territory of the Member State.

Agreement on the transfer and mutualisation of contributions to the Single Resolution fund, 21 May 2014. For the institutional aspects of the IGA, see: Drijber 2015, p. 224-225.

Art. 1(a) and Art. 3 of the IGA.

Art. 4 of the IGA.

The modalities of the mutualisation are laid down in Art. 5 of the IGA.

Recital 19 of the SRM-Regulation.