EN ECB-PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 17 April 2019  
on participation in the Single Resolution Mechanism  
(CON/2019/16) 
 
Introduction and legal basis 
On 20 March 2019 the European Central Bank (ECB) received a request from the Bulgarian Minister of 
Finance for an opinion on a draft law amending and supplementing the Law on the recovery and 
resolution of credit institutions and investment firms, the Law on Българска  народна  банка  (Bulgarian 
National Bank) and the Law on the bank deposit guarantee (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and sixth indents of Article 2(1) of Council Decision 
98/415/EC1, as the draft law relates to Българска  народна  банка  (Bulgarian National Bank (BNB)), rules 
applicable to financial institutions insofar as they mate rially influence the stability of financial institutions 
and markets and tasks conferred on the ECB concerning th e prudential supervision of credit institutions 
pursuant to Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion. 
 1. Purpose of the draft law 
The draft law introduces provisions which the consulting authority considers necessary in relation to the 
application in Bulgaria of Regulation (EU) No 806/ 2014 of the European Parliament and of the Council 
(hereinafter the ‘SRM Regulation’)
2. 
1.1. Competences of the national resolution authorities and the Single Resolution Board 
 The draft law establishes the competences of BNB as the national resolution authority responsible 
for the resolution of credit institutions3 and of the Financial Supervision Commission (FSC) as the 
national resolution authority responsible for the reso lution of investment firms within the meaning of 
the SRM Regulation4. The draft law provides that, when performing their resolution tasks, BNB and 
the FSC must comply with the guidelines and general directions issued by the Single Resolution 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
225, 30.7.2014, p. 1). 
3  See paragraph 1 of the draft law. 
4  See paragraph 3 of the draft law. 
ECB-PUBLIC  
2 Board (SRB)5 and take the necessary actions to implement the SRB’s decisions pursuant to the 
SRM Regulation. 
1.2. Cooperation between national and Union authorities in the context of resolution 
 The draft law further specifies that, in the framework of the SRM Regulation, BNB and the FSC 
must cooperate with the SRB, the European Commission, the Council of the European Union, the 
ECB, national resolution authorities and national competent authorities6. The draft law also amends 
the Law on BNB to enable BNB to exchange information with the SRB7. 
1.3. National financing arrangements 
 The draft law reorganises the existing national resolution financing arrangements. It is envisaged 
that the existing national resolution fund for the resolution of credit institutions (the ‘Bank 
Resolution Fund’ (BRF)), which is currently managed by the Bulgarian Deposit Insurance Fund (BDIF), will in the future be managed by BNB
8. Within the BRF, two sub-funds would be 
established – one sub-fund for the collection of contributions in accordance with Articles 69 to 71 of 
the SRM Regulation and one sub-fund with the objective of funding the resolution of branches of third-country credit institutions. The draft law provides that the available funds in the BRF would be 
held in a BNB account and invested in accordance with the Law on BNB
9. The costs of managing 
the BRF will be financed by the fees collected in connection with BNB’s resolution function and 
pursuant to Article 59a of the Law on BNB. 
The draft law also provides for the split of the existing national resolution fund for the resolution of 
investment firms (the ‘Investment Firm Resolution Fund’ (IFRF)) into two sub-funds: one sub-fund 
for the collection of contributions in accordance with Articles 69 to 71 of the SRM Regulation and 
one sub-fund with the objective of funding the resolution of investment firms which fall outside the 
scope of the SRM Regulation as well as branches of third-country investment firms10. BNB will be 
the depositary of the IFRF11. 
1.4. Contributions to the Single Resolution Fund 
 The draft law mandates BNB and the FSC to notify the relevant credit institutions and investment 
firms of an SRB notification of the amount of contributions due in accordance with Articles 69 to 71 
of the SRM Regulation12. BNB and the FSC will be required to promptly transfer to the Single 
Resolution Fund (SRF) the contributions collected from such credit institutions and investment 
firms. The draft law also aims to facilitate the gradual transfer of the financial means of the BRF to 
the SRF13. In addition, the draft law clarifies the rules for the calculation and collection of 
                                                 
5  See paragraphs 2 and 4 of the draft law. 
6  See paragraph 5 of the draft law. 
7  See paragraph 57 of the draft law. 
8  See paragraph 39 of the draft law. 
9  See paragraph 41 of the draft law. 
10 See paragraph 40 of the draft law. 
11  See paragraph 43 of the draft law. 
12 See paragraph 46 of the draft law. 
13 See paragraph 55 of the draft law. 
ECB-PUBLIC  
3 contributions from branches of third-country credit institutions, investment firms which fall outside 
the scope of the SRM Regulation as well as branches of third-country investment firms14. 
1.5. Competences relating to the application of resolution tools 
To complement the proposed transfer of the management of the BRF from the BDIF to BNB, the 
draft law seeks to transfer the BDIF’s functions with regard to the establishment of bridge 
institutions and asset management vehicles to BNB. In particular, BNB is now empowered to 
establish a bridge bank15, a bridge financial holding company16 and an asset management 
vehicle17. In addition, the draft law specifies that the ca pital of those entities may be fully or partially 
financed by the SRF or the BRF18. Moreover, eligible liabilities may also be converted into ordinary 
shares in order to constitute the capital of a bridge institution19. 
1.6. Exchange of information in the period leading up to the establishment of close cooperation 
 Finally the draft law aims to ensure the appropriate exchange of information for the purposes of 
establishing close cooperation between the ECB and BNB and in relation to the implementation of 
the Agreement on the transfer and mutualisation of contributions to the Single Resolution Fund20. 
To this end the draft law introduces a transitional provision which permits the exchange of 
information, on the one hand, between BNB and the SRB and, on the other hand, between credit institutions established in Bulgaria and the SRB. This transitional provision would apply as of the 
date of publication in the State Gazette and until the date of application of an ECB decision 
establishing close cooperation between the ECB and BNB. 
 
2. General observations 2.1 With regard to the proposed amendments to decision-making and governance of the national 
resolution financing arrangements, the resolution decision-making process should allow for timely and efficient decision-making, if necessary, within a very short time, such as a few days or, where 
necessary, a few hours
21. 
2.2 The ECB underlines that this opinion is without prejudice to the ongoing assessment of the request 
filed on 18 July 2018 by the Republic of Bulgaria to establish close cooperation between the ECB 
and BNB, in line with the existing procedures established under Article 7 of Council Regulation (EU) No 1024/2013
22. 
 
                                                 
14  See paragraphs 43-45 of the draft law. 
15  See paragraph 17 of the draft law. 
16  See paragraph 19 of the draft law. 
17  See paragraph 20 of the draft law. 
18  See paragraphs 17, 19 and 20 of the draft law. 
19  See paragraph 26 of the draft law. 
20  See paragraph 53 of the draft law. 
21  See paragraph 1.3 of ECB Opinion CON/2013/76. All ECB opinions are available on the ECB’s website at 
www.ecb.europa.eu . 
22  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 
ECB-PUBLIC  
4 3. Specific observations  
3.1 BNB as a resolution authority 
BNB is already the national resolution authority competent for the resolution planning and 
resolution of credit institutions. It also has the relevant resolution powers necessary to fulfil these functions. The ECB understands that, under the existing law, BNB is already competent to apply 
both the bridge institution tool and the asset separation tool. In particular, BNB is the competent 
resolution authority to decide on a transfer to a bridge institution or an asset management vehicle 
of instruments of ownership, assets, rights and liabilities
23. BNB is also competent to approve the 
operation of a bridge bank, a bridge financial holding company, or an asset management vehicle, upon proposal of the BDIF
24, while the capital of those entities is provided by the BRF25.  
3.2 Complementing existing resolution tasks 
The proposed transfer to BNB of the existing competences of the BDIF regarding the establishment 
and incorporation of bridge institutions and asset management vehicles does not confer genuinely 
new tasks on BNB. Rather, BNB’s proposed new administrative competences in relation to the management of the BRF complement BNB’s existing  resolution tasks. The draft law specifies 
certain new administrative competences that BNB would exercise when carrying out its tasks as a resolution authority.  
3.3 Compliance with the monetary financing prohibition 
Since the draft law only envisages complementing BNB’s existing resolution tasks, it is not 
necessary to assess whether the conferral of new tasks on a national central bank complies with 
the prohibition of monetary financing under the Treaty. The ECB understands that BNB will manage, but not own, the BRF. The role of a resolution fund that is managed within a central bank 
must remain consistent under all circumstances with the prohibition on monetary financing under Article 123 of the Treaty, as supplemented by Council Regulation (EC) No 3603/93
26, which 
prohibits, inter alia, any financing by a central bank of the public sector’s obligations vis-à-vis third 
parties27. While administrative resolution tasks may be considered to be central banking tasks, the 
discharge of these tasks by central banks may not extend to the financing of resolution funds or 
other financial arrangements related to resolution proceedings as these are governmental tasks28. 
The provision of such financing would constitute a government task in breach of the prohibition of 
monetary financing under the Treaty29. Where a resolution fund established within a central bank 
holds capital of a bridge institution or an asset management vehicle, it should be clarified, for the 
                                                 
23  See Articles 60(1) and 64(1) of the Law on the recovery and resolution of credit institutions and investment firms. 
24  See, for example, Articles 61(2), 63(2) and 64(5) of the Law on the recovery and resolution of credit institutions and 
investment firms. 
25  See, for example, Articles 61(1), 63(1) and 64(3) of the Law on recovery and resolution of credit institutions and 
investment firms. 
26  Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the 
prohibitions referred to in Articles 104 and 104b (1) of the Treaty (OJ L 332 , 31.12.1993, p. 1). 
27  See paragraph 3.1.2 of Opinion CON/2015/35. 
28  See paragraph 2.1.2 of ECB Opinion CON/2019/13 and paragraph 3.2.3 of Opinion CON/2016/28. 
29  See paragraph 3.1.1 of Opinion CON/2015/35 and paragraph 3.1.4 of Opinion CON/2015/22. 
ECB-PUBLIC  
5 avoidance of doubt, that the central bank will not em ploy its resources, other than those collected in 
the resolution fund, to assume or finance any obligation of these entities30.  
3.4 Financial independence 
The principle of financial independence requires NCBs to have sufficient means to carry out not 
only their ESCB-related tasks from an operational an d financial point of view, but also their national 
tasks. For that reason, it should be ensured that if a resolution fund established within BNB 
becomes the owner of a bridge institution or an asset management vehicle, sufficient financial and 
human resources are provided to address the operational burden associated with it31. The ECB 
notes that the draft law provides that the costs of managing the BRF will be financed by the fees 
collected in connection with BNB’s resolution function. 
3.5 Liability of BNB 
The ECB notes that the BNB, the members of t he BNB Governing Council, and the BNB staff are 
not held liable for acts or omissions in the course of discharging their duties under the Law on the 
recovery and resolution of credit institutions and investment firms, unless they acted intentionally32. 
The ECB understands that this provision applies al so in relation to the draft law and the BNB’s 
tasks of managing the BRF and acting as the depositary of the IFRF. 
 
This opinion will be published on the ECB’s website.  
 
Done at Frankfurt am Main, 17 April 2019.  
[signed]  
The President of the ECB 
Mario DRAGHI 
                                                 
30  See paragraph 3.1.2 of Opinion CON/2015/35 and paragraph 3.4.2 of Opinion CON/2015/25. See also ECB 
Convergence Report 2018, point 2.2.5.1. 
31  See paragraph 3.1.2 of Opinion CON/2015/35. 
32  See Article 5(3) of the Law on the recovery and resolution of credit institutions and investment firms.