Elke König

Chair of the Single Resolution Board

FDIC Systemic Resolution Advisory Committee

14 April 2016

The Single Resolution Mechanism
Introduction

• The Single Resolution Board

• Resolution objectives and resolution planning

• Obstacles to resolution

• The Single Resolution Fund

• Our 2016 Work Programme

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Single Rulebook

EU

Single 

Supervisory 

Mechanism

Eurozone+ 

Single

Resolution 

Mechanism

Eurozone+

Deposit 

Guarantee 

System

Eurozone+

CRD IV/CRR BRRD DGSD

The Banking Union

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European Bank Resolution Authority

c.150 employees. Target for 2017: 300

Single Resolution Board

Who we are

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Single Resolution Board

Responsibilities

• establish rules and procedures for resolution

• establish a unified resolution regime

• enhance bank resolvability

Outcomes

• a safer banking system

• greater market confidence

• reduced cost of bank failure

• improved financial stability across the EU

to the benefit of banks, taxpayers and depositors

Eurozone

EU Member State (not in Eurozone)

What we do

The SRB is focused on resolution planning, setting of MREL, removing of obstacles as well as on anticipating and avoiding

any possible negative consequences of a resolution. Together with the National Resolution Authorities (NRAs) of

participating Member States, it forms the SRM, the second pillar of the Banking Union.

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Single Resolution Board

The SRB is directly responsible for:

• Large banks

• Cross-border banking groups

• The functioning of the SRM

NRAs are directly responsible for all other banks

The SRB closely cooperates with NRAs, the ECB, the 

European Commission and institutions outside the 

Euro area

How we work

The Single Resolution Mechanism (SRM) allocates specific tasks to the SRB and

NRAs

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Resolution objectives

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Resolution objectives

 Continuity of critical functions

 Financial stability

 Protection of public funds

 Protection of depositors

 Protection of client funds and assets
What are Critical Functions?

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BRRD

Art. 2(1)(35-36), Art. 10(7)(c), Art. 

15(1), Art. 31(2)(a), Annex Section B (4)

Delegated Regulation (Feb '16)

Commission Delegated Regulation on 

Critical Functions & Core Business Lines

International standard setters proposed a 

widely accepted definition for Critical Functions

Keywords:

 Systemic relevance (size, complexity, contagion, 

interconnectedness, market confidence, etc.)

 Substitutability (market shares, barriers to entry, 

capability and willingness of competitors, etc.)

SRMR

Art. 8(9)(c), Art.10(3-4), Art. 14(2)(a)

EBA/RTS/2014/15

Art. 3(c)(ii)

EBA/Op/2015/05

Technical advice on delegated acts on 

Critical Functions & Core Business Lines 

FSB

Guidance on Identification of Critical 

Functions and Critical Shared Services

FSB Key Attributes

paragraphs 11.6 “Resolution Plan”, IAnnex 3 paragraph 4.1 and 4.2. 
Resolution planning process

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Obstacles to resolution

• Multiple interdependencies within a G-SIB

• Inadequate IT and reporting systems

• Where critical support functions are allocated

• Capital structure (sufficient bail-in able debt)

• MREL / TLAC [see following slides]

• Cooperation between authorities

• Cross-border recognition of resolution measures

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A new legislative 

framework at EU 

level 

(28 countries)

Capital Requirement 

legislation 

(CRR and CRD IV)

Bank Recovery and 

Resolution Directive 

(BRRD) => MREL

Completed by 

EBA's technical 

guidelines and 

standards. 

Total Loss Absorbing 

Capacity (TLAC)

Term sheet issued 

by the FSB to be 

implemented

MREL and TLAC

The Financial Crisis called for a strengthened EU legislation

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MREL TLAC

Scope • All the institutions in the scope of BRRD 

as of 2016

• G-SIB as of 2019

Target level

• Pillar 2 requirement, i.e. institution

specific

• However, 8% of bail-in of total liability is

a minimum criterion to get access to the

Single Resolution Fund

• Common pillar 1 requirement

• 16% of RWA and 6% of the

Basel III leverage ratio

denominator (first phase)

Level of 

requirements

• Solo and consolidated (i.e. around 500 

MREL decisions)

• Consolidated B/S of the 

resolution group

Eligible

instruments

• Maturity > 1 year

• Senior and subordinated liabilities

meeting MREL criteria and not explicitly

excluded from bail-in (...)

• Maturity > 1 year

• Nothing else than subordinated

debts and 2.5% of senior debt 

(first phase).

MREL and TLAC

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Within the SRM, the national funds will largely be replaced by

the Single Resolution Fund (SRF).

The SRF is operational from 1 January 2016.

Target funding level: 1% of covered deposits in the SRM area, to

be reached in eight years.

2016 – 2024 → national compartments that will progressively 

merge into a single, fully-mutualised pot.

Financed by ex ante contributions of the banks. Contributions

comprise a flat part and a risk-adjusted part. They are

calculated at European level but collected at national level and

transferred to the SRF in accordance with the

Intergovernmental Agreement (IGA).

If need be, ex post contributions can be raised, and the SRF

can borrow money to make up any shortfalls.

The NRAs transferred the contributions that they collected for 

2015 to the SRF at the end of January. It currently stands at 4.3 

billion Euros.

Regarding 2016 contributions, they will be transferred to the SRF 

by 30 June 2016. 

The Single Resolution Fund 

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2016 Work Programme

RESOLUTION PLANNING

• Draft resolution plans

• Undertake resolvability assessment for all GSIBs

• Set consolidated MREL

• Resolution planning tool (tracks the progress made by each unit in meeting all

deadlines)

RESOLUTION READINESS

• Internal resolution teams

• Resolution colleges

• Crisis simulation exercise

SINGLE RESOLUTION FUND

• Collect all 2016 ex ante contributions

• Adopt investment strategy

• Strategies for alternative funding

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• Define funding and 

financing for the 

SRF

• Develop and 

implement 

investment 

strategy for the 

SRF

• Ensure timely 

contributions to 

the SRF

2016 Work Programme 

Ensuring 

resolution 

readiness

Fostering 

cooperation

Operationalising

the SRF

• Further develop resolution plans 

for entities under SRB's remit

• Further develop the Resolution 

Planning and Crisis Management 

Manuals as well as policy 

orientations for the use of 

resolution tools

• Make progress on enhancing 

resolvability by identifying 

barriers to resolution and by 

providing and implementing 

concrete guidance on ways to 

remove them, including on MREL

• Become the centre of expertise for 

resolution-related topics

• Contribute to the review of 

existing legislation and relevant 

regulatory activities 

• Improve preparedness by 

carrying-out crisis simulation 

exercises

• Operationalise MoUs

with the ECB and the 

EC

• Establish MoUs with 

non-Banking Union 

European partners 

• Establish MoUs and 

cooperation 

agreements with 

partners beyond the 

EU

• Develop a culture of 

efficient cooperation 

with NRAs

• Establish Resolution 

Colleges

Main objectives

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Conclusion

The Single Resolution Mechanism enables the orderly resolution of

failing banks. It will minimise adverse impacts on both the real

economy and public finances.

The Single Resolution Mechanism will help to avoid future bank 

bail-outs and place the burden of bank failure firmly onto shareholders

and creditors, not governments and taxpayers.

The Single Resolution Board will thus ensure greater stability in the

banking system and support growth in the Eurozone.

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Thank you!
ANNEX I - Timeline – Key steps in setting up the SRM 

2016

Q2 Q3 Q4

Establishment of the 

Commission Task Force 

for the establishment of 

the SRB

Legal establishment of the 

SRB with SRM-Regulation

19-08-2014

SRB begins operations

01-01-2015

First Board 

meeting

March 2015

11-12-2014

Full resolution

Authority

01-01-2016

Delegated 

act on 

contributions

Planning and 

implementation 

phase

Q1 Q1

2014 2015

Q2 Q3 Q4

Resolution 

Planning phase

Q1 Q2 Q3 Q4

IRT Establishment

February 2016

Today

TRP Submission by NRA

01-12-2015

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ANNEX II - Resolution process

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ANNEX III - SRM process after SRB adoption of resolution 

scheme 

Scenario 1

12 hrs 12 hrs 8 hrs

[24 hrs] COM endorses scheme Scheme enters into force

[24 hrs] COM objects to the scheme 

(discretionary aspects) 

SRB modifies scheme

[12 hrs] COM proposes 

Council to object – public 

interest

[12 hrs] Council does not object

[12 hrs] Council objects

Scheme enters into force

Winding up (national law)

[12 hrs] COM proposes 

Council material 

modification use of Fund

[12 hrs] Council approves it SRB modifies scheme

[12 hrs] Council rejects it Scheme enters into force

Scenario 2

Scenario 3

Scenario 4

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