Publication: Understanding Bank Recovery and Resolution in the EU: A Guidebook to the BRRD
Date
2016-11
ISSN
Published
2016-11
Author(s)
World Bank Group
Abstract
The 2007 financial crisis has exposed
major weaknesses in global financial systems, including the
threat to financial stability posed by banks that were too
big, interconnected and complex to be closed or go bankrupt.
As a result, many banks have been rescued using public
support, allowing for an uninterrupted provision of their
services, but effectively shifting (most) of their losses to
taxpayers instead of banks’ owners or investors. The
political realities following the bail-out of banks called
for game-changing regulation to reduce both the likelihood
and the impact of failure.The Banking Recovery and
Resolution Directive (BRRD) became one of the most important
building blocks of the Banking Union. The BRRD is the
outcome of a long negotiation process. The new bank recovery
and resolution framework has wide reaching implications,
both within the EU but also for countries with banking
relationships with the EU. This Guidebook aims to explain
the scope, the principles, and the rationale of the BRRD and
related secondary legislation and guidance. Expert
contributors, including lawyers and academics, share in this
Guidebook their experience of and insights to the BRRD
negotiation process, recovery and resolution planning,
adoption of resolution decisions and the negotiation of
bail-in. The Guidebook also raises awareness of
discretionary or non-regulated areas and provides some
initial thoughts for further development and possible
implementation challenges. These challenges include but are
not limited to the management of potential conflict of
interests, the application of the public interest test, the
choice of resolution tools, and the interaction between
cross-border regulations. The Guidebook, together with the
accompanying case studies, should help FinSAC client
countries understand the resolution process and identify the
impact that the BRRD will have on their own financial systems.
Citation
“World Bank Group. 2016. Understanding Bank Recovery and Resolution in the EU; Understanding Bank Recovery and Resolution in the EU : A Guidebook to the BRRD. © World Bank, Vienna. http://openknowledge.worldbank.org/handle/10986/25974?show=full License: CC BY 3.0 IGO.”