4.4.2 The resolution objectives

The resolution objectives are (a) to ensure the continuity of critical functions, (b) to avoid a significant adverse effect on the financial system, in particular by preventing contagion, including to market infrastructures and by maintaining market discipline, (c) to protect public funds by minimising reliance on extraordinary public financial support, (d) to protect depositors and investors, and (e) to protect client funds and client assets.

As set out in section 4.4.1.3, the resolution objectives play a role in the decision whether a bank should be put in resolution in the first place. Only if winding up of the bank in normal insolvency proceedings e.g. jeopardizes financial stability, interrupt the provision of critical functions or affect the protection of depositors, it should be considered that there is a public interest to put the bank in resolution.1 In addition, the resolution objectives also provide guidance as to which resolution tools should be chosen when a bank is put in resolution.

The resolution objectives are of equal significance and resolution authorities should balance them as appropriate to the nature and circumstances of each case, provided that no other provision of the BRRD or SRMR dictates otherwise.2 The resolution authorities are provided with wide discretion to act as they consider appropriate on a case-by-case basis.3 They should however always seek to minimise the cost of resolution and avoid destruction of value unless necessary to achieve the resolution objectives.4 The resolution objectives are further discussed in the following sections.