The Single Banking Resolution Mechanism

Abstract

The European authority in the field of banking resolution is the Single Resolution Board (SRB), in collaboration with the national resolution authorities. The resolution of a bank involves its restructuring by this Board, through a series of instruments aimed at ensuring the continuity of the institution’s critical functions and financial stability in one or several Member States. This article describes the basic characteristics of the Single Banking Resolution Mechanism. Aspects relating to its mission, governance and organisation are first set out. A description that follows of the substantive elements of a resolution plan, namely public interest, critical functions, resolution strategies and instruments, the analysis of a bank’s resolvability and the identification of obstacles to resolution. The author also explains the setting of a minimum level of eligible liabilities (MREL) and describes the functioning of the Single Resolution Fund. Lastly, a summary is given of the SRB’s activity since it was established in 2015, and the ongoing legislative reforms under the European resolution framework are set out.