4.5.1.1 The decision to put the bank in resolution

The first step to resolution is the adoption of a decision by a resolution authority to put the bank or banking group in resolution (the resolution decision). This decision follows the assessment of the resolution conditions as set out in section 4.4.1, including the valuation of the assets and liabilities of the bank or banking group to be put in resolution.1 If the conditions for resolution are met, the resolution authorities have to adopt a resolution decision.2 There is no discretion in that regard.

Under the SRM, the resolution decision is taken by the SRB in the form of a ‘resolution scheme’ when it concerns significant banks and banking groups directly supervised by the ECB as well as other pan-European banking groups.3 This resolution scheme places the bank or banking group in resolution, determines the application of the resolution tools and determines the use of the SRF to support the resolution action.4 If resolution requires recourse to the SRF, the SRB always adopts the resolution decision, irrespective of whether the bank is significant or the banking group is directly supervised by the ECB or is a pan-European banking group.5

Immediately after the adoption of a resolution scheme by the SRB, the SRB has to transmit it to the Commission. The Commission subsequently has 24 hours to either endorse the resolution scheme or object to it with regard to the discretionary aspects of the resolution scheme.6 The resolution scheme may enter into force only, if no objection has been expressed by the Council or the Commission within 24 hours after its transmission.7

The Commission may, within 12 hours from the transmission of the resolution scheme, propose to the Council to (a) object to the resolution scheme on the ground that it does not fulfil the third resolution condition of public interest or (b) approve or object to a material modification – as proposed by the Commission – of the amount of the SRF provided for in the resolution scheme.8 A change of 5% or more to the amount of the SRF compared with the original proposal of the SRB should be considered to be material. The Council should approve or object to the Commission's proposal for modification of the resolution scheme without amending it.9 If the Council approves the Commission’s proposal, the SRB has to modify, within 8 hours, the resolution scheme.10 The same applies if the Commission objects to the resolution scheme.11

If the Council objects to the placing of a bank in resolution on the ground that the public interest condition is not fulfilled, the relevant entity shall be wound up in an orderly manner in accordance with applicable national law.12

Considering that resolution action requires a very speedy decision-making process, the Council and the Commission should cooperate closely and the Council should not duplicate the preparatory work already undertaken by the Commission.13

The involvement of the Commission and the Council in the adoption of the resolution scheme by the SRB is prompted by the principle of delegation of powers to agencies as interpreted by the ECJ. This is further discussed in section 6.2.2.

Where it concerns less significant banks or banking groups that are not directly supervised by the ECB or that are not pan-European banking groups, but that are established in a participating Member State of the SSM,15 the national resolution authorities have the power to take the resolution decision, unless the resolution involves the use of the SRF.16 They shall closely coordinate with the SRB.17

The SRB may issue a warning to the relevant national resolution authority, if it considers that the draft decision of the national resolution authority does not comply with the SRMR or with its general instructions.18 It may also at any time decide to exercise its powers in respect of any bank established in a participating Member State, where necessary to ensure the consistent application of high resolution standards.19 The SRB can for example exercise this power when a national resolution authority does not appropriately address a warning given by the SRB. Lastly, a participating Member State may decide that the SRB exercises its powers in respect of any bank established in this participating Member State. A participating Member State that intends to make use of this option should notify the SRB and the Commission accordingly.20

Outside the SRM, the power to make the resolution decision always lies with the national resolution authorities.21 The SRB plays no role in the resolution process outside the SRM.