Opinion of the European Central Bank of 16 October 2015 on recovery and resolution of credit institutions and investment firms (CON/2015/35)
Date: 2015-10-16
Institutions: European Central Bank
Subjects: Italy, aid for restructuring, banking supervision, central bank, competence of the institution, credit institution, economic stabilisation, financial intervention, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 October 2015 

on recovery and resolution of credit institutions and investment firms 

(CON/2015/35) 

Introduction and legal basis 

On 29 July 2015 the European Central Bank (ECB) received a request from the Italian Ministry of Finance 

(MoF) for an opinion  on two legislative  decrees on the recovery and resolution  of credit institutions and 

investment firms (hereinafter jointly the ‘draft legislative decrees’). 

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  on  the  third  and  sixth  indents  of  Article 2(1)  of  Council 
Decision 98/415/EC1, as the draft legislative decrees relate to the Banca d’Italia and to rules applicable to 

financial institutions insofar as they materially influence the stability of financial institutions and markets. 

For elements of the draft legislative decrees the exclusive purpose of which is the transposition of Union 

law, the ECB’s competence to deliver an opinion is based on Article 25.1 of the Statute of the European 

System  of  Central  Banks  and  of  the  European  Central  Bank  (hereinafter  the  ‘Statute  of  the  ESCB’).  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.  

1.1 

Purpose of the draft law 

The  purpose  of  the  draft  legislative  decrees  is  to  implement  Directive  2014/59/EU  of  the 
European  Parliament  and  of  the  Council2  into  Italian  law,  thereby  aligning  the  Italian  legal 

framework for the recovery and resolution of certain types of entities active in financial markets, 

including  credit  institutions,  investment  firms,  and  financial  holding  companies  that  have  their 

head office in Italy, with the existing Union legislation in this field.  

1.2 

The  draft  legislative  decrees  regulate  plans  and  procedures  for  the  recovery  and  resolution  of 

entities falling within their scope and the status and the powers of the supervisory and resolution 

authorities in relation to banking and financial institutions at both individual and group level.  

1  

2  

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). 
Directive 2014/59/EU of the European Parliament and of the Council of 15 May  2014 establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190). 

 
 
 
 
                                                 
ECB-PUBLIC 

1.3 

Directive 2014/59/EU would be transposed by means of two legislative decrees. The first decree3 

defines  the  status  and  powers  of  the  relevant  national  authorities  as  well  as  the  forms  of 

cooperation  and  exchange  of  information  among  them,  resolution  plans,  resolution  tools  and 

procedures,  the  establishment  of  resolution  funds,  safeguards,  the  right  of  appeal  against 

decisions  regarding  crisis  prevention  or  crisis  management  measures  and  administrative 
penalties.  The  second  decree4  would  amend  the  Consolidated  Law  on  Banking5  and  the 
Consolidated  Law  on  Finance6  by  laying  down  rules  for  recovery  plans  at  individual  and  group 

level,  agreements  for  group  financial  support,  and  early  intervention  measures,  including  the 

removal  of  senior  management  and  the  appointment  of  a  temporary  administrator  of  a  credit 

institution. Early intervention measures are to be coordinated with the compulsory administrative 

liquidation  procedure  to  avoid  any  unwarranted  overlap.  Moreover,  recovery  and  resolution 

measures applicable to credit institutions are extended to investment firms established in Italy.   

1.4 

Under  the  draft  legislative  decrees,  the  Banca  d’Italia  is  designated  as  a  resolution  authority 

within  the  meaning  of  Directive  2014/59/EU  (with  the  National  Committee  for  Companies  and 

Stock Exchange, [Commissione Nazionale per le Società e la Borsa, CONSOB] entitled to make 

certain proposals within its remit in the case of investment firms). In observance of the principle of 

organisational  autonomy,  the  Banca  d’Italia  is  expected  to  implement  appropriate  measures  to 

ensure  operational  independence  between  the  tasks  related  to  crisis  management  and  other 

tasks conferred upon it and establish mechanisms for cooperation and coordination between the 

different structures involved.  

1.5 

The  draft  legislative  decrees  provide  for  crisis  management  tools.  The  Consolidated  Law  on 

Banking has already enabled the Banca d’Italia to take extraordinary measures. For example, the 

Banca  d’Italia,  acting  alone,  may  prohibit  credit  institutions  from  carrying  out  new  operations  or 

require credit institutions to close branches. By contrast, the power to place credit institutions into 

special  administration,  possibly  preceded  by  provisional  management,  or  into  compulsory 

administrative liquidation, was vested in the MoF, acting on a proposal of the Banca d’Italia. The 

draft  legislative  decrees  amend  the  Consolidated  Law  on  Banking  so  as  to  introduce  recovery 

plans,  group  financing  agreements  and  early  intervention  measures.  The  write-down  and 

conversion  of  capital  instruments,  resolution  tools  and  the  establishment  and  use  of  resolution 

funds are also introduced by the draft legislative decrees. Finally, resolution tools would be made 

applicable, mutatis mutandis, to investment firms.  

3  

4  

5  
6  

Draft  legislative  decree  implementing  Directive  2014/59/UE  of  the  European  Parliament  and  of  the  Council  of 
15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and 
amending  Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC, 
2007/36/EC,  2011/35/EU,  2012/30/EU  and  2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU) 
No 648/2012, of the European Parliament and of the Council (hereinafter the ‘Implementation Decree’). 
Draft  Legislative  Decree  amending  Legislative  Decree  No  385  of  1°  September  1993  (‘Consolidated  Law  on 
Banking’) and Legislative Decree No 58 of 24 February 1998 (‘Consolidated Law on Finance’) in implementation of 
Directive 2014/59/UE of the European Parliament and of the Council of 15 May  2014 establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (hereinafter the ‘Amending Decree’). 
Legislative Decree No 385 of 1 September 1993. 

Legislative Decree No 58 of 24 February 1998. 

2 

                                                 
ECB-PUBLIC 

1.6 

The tools made available to the Banca d’Italia comprise preparatory measures, early intervention 

measures, the write-down or conversion of capital instruments and resolution measures. 

1.7 

Preparatory measures include recovery plans and group financial support agreements. Recovery 

plans are drawn up by the obliged credit and financial institutions and reviewed and assessed by 

the  Banca  d’Italia,  which  may  also  require  these  recovery  plans  to  be  updated.  Any  decisions 

taken by an institution to implement any measures envisaged in the recovery plan it has drawn up 

must  be  notified  to  the  Banca  d’Italia.  Regarding  group  financial  support  agreements,  the 

submission of the draft agreement to the extraordinary meeting of shareholders is subject to the 

prior  authorisation  of  the  Banca  d’Italia.  The  decision  providing  financial  support  may  be 

challenged by the Banca d’Italia in order to prevent or limit its implementation.  

1.8 

Early  intervention  measures  include  the  implementation  of  recovery  plans,  a  request  for  the 

removal  of management  and  supervisory  bodies,  special  administration  and  other  extraordinary 

measures.  Regarding  the  implementation  of  recovery  plans,  the  Banca  d’Italia  may  request 

obliged  institutions  to  update  the  recovery  plan  and  require  its  full  or  partial  implementation. 

Regarding the request for the removal of management and supervisory bodies, the Banca d’Italia 

may request that senior managers and members of management and supervisory bodies of the 

institution are removed and replaced. The appointment of newly appointed senior managers and 

members is subject to the prior approval of the Banca d’Italia. Regarding special administration, 

the  Banca  d’Italia  may  remove  the  management  and  supervisory  bodies  of  the  institution  and 

appoint special commissioners and a supervisory committee instead (special administration may 

be preceded by the interim measure of provisional management in particularly urgent cases). In 

principle,  the  special  commissioners  have  the  same  powers  as  the  management  bodies  of  the 

institution but the Banca d’Italia may limit their powers and tasks. The special commissioners and 

the members of the supervisory committee may be removed or replaced by the Banca d’Italia at 

any  time.  Moreover  the  Banca  d’Italia  may  appoint  commissioners  to  work  temporarily  with  the 

management body of the institution. Regarding other extraordinary measures, the Banca d’Italia 

may prohibit a credit institution from carrying out new operations or opening new branches.  

1.9 

The power to write down or convert relevant capital instruments is vested in the Banca d’Italia.  

1.10  Regarding  resolution  measures,  institutions  which  are  failing  or  likely  to  fail  may  be  placed  into 

resolution  and  thus:  (a)  have  their  shares,  ownership  instruments,  assets,  rights  or  liabilities 

transferred  to  a  purchaser  under  the  sale  of  business  tool;  (b)  have  their  shares  or  other 

ownership instruments transferred to a bridge institution under the bridge institution tool; (c) have 

their assets, rights, or liabilities transferred to an asset management vehicle company under the 

asset  separation  tool;  (d)  be  subject  to  the  bail-in  tool.  The  Banca  d‘Italia’s  decision  to  place  a 

distressed bank into resolution and any changes to the resolution programme are subject to the 

prior  approval  of  the  Minister  of  Economy  and  Finance,  whereas  the  implementation  of  the 

measures outlined in the resolution programme is the sole responsibility of the Banca d’Italia. The 

Banca  d’Italia  implements  the  resolution  programme  by  appointing  special  commissioners,  and 

sending  specific  orders  to  the  relevant  bodies  of  the  institution.  The  allowances  due  to  special 

commissioners  and  members  of  the  supervisory  committee  are  set  by  the  Banca  d’Italia  and 

either paid by the entity  under resolution or advanced by the  Banca  d’Italia  and  then recovered 

3 

ECB-PUBLIC 

out of the price paid in exchange for the transfer of shares and other equities, from the institution 

under  resolution  or  from  the  surplus,  if  any,  of  the  bridge  institution  or  the  asset  management 

vehicle  company.  Claims  for  such  allowances  enjoy  general  priority  and,  in  case  of  insolvency, 
are treated as preferential claims in liquidation proceedings 7.  

1.11  Resolution funds for the purpose of achieving resolution objectives may be established within the 
Banca  d’Italia8.  The  management  of  such  funds  may  be  delegated  to  recognised  deposit 

guarantee schemes. The Banca d’Italia may also decide to establish resolution funds within other 

entities,  including  recognised  deposit  guarantee  schemes.  In  this  case  the  Banca  d’Italia 

assesses whether their statutes are compliant with the rules laid down in the relevant provisions 

of the draft legislative decrees and approves them.  

1.12  Resolution  funds  are  financed  by  means  of  ordinary  ex  ante  and  extraordinary  ex  post 

contributions levied on banks established in Italy and on Italian subsidiaries of banks established 

outside  the  Union,  borrowings  and  other  forms  of  financial  support,  and  amounts  paid  by  the 

institution subject to resolution or by the bridge institution. The assets of the funds are ring-fenced 

from  the  Banca  d’Italia’s  and  the  funding  institutions’  own  assets  and  only  meet  the  liabilities 

assumed  in  connection  with  resolution  actions.  The  same  applies  where  resolution  funds  are 

established  within  other  entities,  including  recognised  deposit  guarantee  schemes.  Creditors  of 

the Banca d’Italia, creditors of other entities within which the fund is established and creditors of 

the contributors to the funds are prevented from taking individual enforcement action against the 

funds.  

1.13 

In  accordance  with  the  no  creditor  worse  off  principle,  shareholders  or  creditors  that  have 

incurred  greater  losses  in  a  resolution  than  they  would  have  incurred  in  a  winding-up  under 

normal  insolvency  proceedings  are  entitled  to  the  payment  of  the  difference from  the  resolution 

funds. Where  a  bridge  institution  tool  or  asset  separation  tool  is  used,  the  capital  of  the  bridge 

institution  and  of  the  asset  management  vehicle  company  is  wholly  or  partially  held  by  the 

resolution fund or by other public entities. 

1.14 

Procedural  requirements  are  established  to  ensure  that  resolution  actions  are  properly  notified 

and  a  confidentiality  regime  is  imposed  upon  the  authorities  involved  in  resolution  actions  and 

their staff. A cooperation regime between public authorities is established, and the Banca d’Italia, 

other competent authorities and the MoF are also required to provide one another, upon request, 

with all the relevant information for the other authority to carry out its tasks. The Banca d’Italia is 

authorised to impose administrative measures and administrative sanctions. 

1.15 

The civil liability of the Banca d’Italia, the members of its bodies and its staff towards third parties 

for actions or omissions in the performance of their duties is limited to gross negligence and wilful 
misconduct9.  

1.16 

In order to implement the depositor preference rule in Italian law, the ranking of unsecured claims 

in  the  context  of  compulsory  administrative  liquidation  of  credit  institutions  has  been  amended 

7  
8  
9  

See Article 37(7) and (8) of the Implementing Decree. 
See Articles 78 to 86 of the Implementing Decree. 

See Article 24(6-bis) of Law No 262 of 28 December 2005. 

4 

                                                 
ECB-PUBLIC 

such  that  deposit  claims  take  priority  over  other  unsecured  claims  in  the  following  order:  (a) 

claims related  to covered  deposits and claims of  deposit guarantee schemes subrogated to the 

rights  and  obligations  of  covered  depositors;  (b)  that  part  of  the  deposits  of  natural  persons, 

micro,  small  and  medium-sized  enterprises  eligible  exceeding  the  amount  covered  by  deposit 

guarantee  schemes  and  comparable  deposits  referred  paid  into  non-Union  branches  of  banks 

having  their  registered  office  in  Italy;  and  (c)  other  deposits.  The  definition  of  ‘deposits’  clarifies 

that  it  includes  certificates  of  deposits  not  taking  the  form  of  transferrable  securities  and  not 

issued in a series.  

1.17 

Finally,  the  draft  legislative  decrees  provide  for  the  provision  of  financing  by  the  Banca  d’Italia 

where  a  bank  is  placed  into  compulsory  administrative  liquidation  and  liquid  financial  resources 

are not available or insufficient to meet preference claims. In particular, the costs of proceedings 

in  relation  to  any  phases  preceding  the  liquidation  phase  (provisional  management,  special 

administration  or  voluntary  wind  up)  are  paid  in  advance  by  the  Banca  d’Italia  and  advance 

payments are then recovered from the financial resources available to the credit institution, after 

reimbursement of the clients entitled to restitution of financial instruments held on custody by the 

credit institution,  and  before the  payment  of other preference claims. Where financial resources 

are insufficient to meet the costs of the proceedings in the liquidation phase, which are normally 

to  be  paid  ahead  of  other  preference  claims,  and  where  clients’  financial  resources  are  not 

available  or  not  easily  available  or  insufficient  for  this  purpose,  the  Banca  d’Italia  may  make 

advance  payments  up  to  EUR  400,000  or  double  the  amount  payable  to  the  liquidators, 

whichever is higher. Advance payments made by the Banca d’Italia are then recovered from the 

available  financial  resources  with  priority  over  other  preference  claims  (and  then  from  clients’ 
available financial resources)10.  

2. 

General observations  

2.1 

The  ECB  welcomes  the  draft  legislative  decrees,  as  they  strengthen  the  tools  and  procedures 

available  to  the  Banca  d’Italia  to  carry  out  effective  preventive,  early  intervention  and  effective 

resolution  measures  in  line  with  the  common  framework  of  intervention  powers,  rules  and 

procedures laid down in Directive 2014/59/EU. 

2.2  

The ECB stresses, however, that it does not opine on whether the draft law effectively discharges 

the  obligations of the Italian State to  implement Directive 2014/59/EU  in Italian  law. Rather, the 

ECB  focuses  primarily  on  those  provisions  that  may  impact  on  the  role  and  tasks  of  the  Banca 

d’Italia as a central bank and as a member of the European System of Central Banks (ESCB), as 

well  as  on  those  provisions  that  may  impact  on  the  specific  tasks  conferred  on  the  ECB 

concerning  policies  relating  to  the  prudential  supervision  of  credit  institutions  by  Council 
Regulation (EU) No 1024/201311. 

10   
11  

Article 1(35) of the Amending Decree. 
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies 
relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

5 

 
                                                 
ECB-PUBLIC 

2.3 

The ECB underlines that, in the context of the proposed conferral of tasks on an ESCB member, 

it  is  necessary  to  assess  such  conferral  against  the  prohibition  of  monetary  financing  under 
Article 123 of the Treaty12. The ECB has developed the guidance outlined below, in the form of 

general  and  specific  considerations,  on  the  basis  of  which  it  decides  whether  a  new  task 

conferred on an ESCB national central bank (NCB) is to be considered a central banking task or 

a government task for the purposes of the prohibition of monetary financing.  

2.3.1  General considerations 

First, the systematic categorisation of tasks assigned to NCBs as central banking or government 

tasks applies to genuinely new tasks that either did not exist in the past or did not form an integral 

part of the central banking tasks assigned to the NCB in the past. In recognition of the different 

Member  States’  legal  frameworks,  central  banking  traditions  and  national  set-ups,  the  tasks 

currently  discharged  by  an  NCB  as  central  banking  tasks  are  not  reviewed  and  re-categorised, 

but may be reassessed if they are subject to legislative amendments of substance.  

Second,  the  principle  of  financial  independence  requires  that  the  Member  States  may  not  put 

their NCBs in a position where they have insufficient financial resources to carry out their ESCB- 

or Eurosystem-related tasks, as applicable.  

Third, central banking tasks comprise in particular those tasks that are related to the tasks listed 

in Article 127(2), (5) and (6) of the Treaty. 

Fourth, new tasks conferred on an NCB which are atypical of NCBs’ tasks, or which are clearly 

discharged on behalf of and in the exclusive interest of the government or of other public entities, 

should  be  considered  as  government  tasks.  In  that  context,  a  distinction  should  be  drawn 

between  liquidity-  and  solvency-related  tasks  of  NCBs.  While,  for  purposes  of  the  monetary 

financing prohibition, solvency support is  a government task, liquidity-related tasks, the  ultimate 

objective of which are to finance the economy, are central banking tasks. 

2.3.2  Specific considerations 

Resolution tasks can be considered central banking tasks, provided that they do not undermine 

an NCB’s independence in accordance with Article 130 of the Treaty. However, the discharge of 

these  tasks  by  central  banks  may  not  extend  to  the  financing  of  resolution  funds  or  other 
resolution  financial  arrangements  as  these  are  government  tasks13.  This  is  without  prejudice  to 

the  following:  (a)  the  possibility  that  central  banks  may  provide  short-term  financing  to  deposit 

guarantee  schemes  under  certain  conditions;  and  (b)  the  possibility  that  NCBs  may  provide 

emergency liquidity assistance to solvent credit institutions. 

An  important criterion for qualifying a  new task as a government task is therefore the  impact of 

the  task  on  the  institutional,  financial  and  personal  independence  of  the  NCB.  In  particular,  the 

following should be taken into account. 

First,  it  should  be  assessed  whether  the  performance  of  the  new  task  creates  inadequately 

addressed  conflicts  of  interests  with  existing  central  banking  tasks,  and  does  not  necessarily 

12  
13  

See Opinion CON/2015/22.  

See paragraph 2.3.2 of Opinion CON/2015/22. 

6 

                                                 
ECB-PUBLIC 

complement those existing central banking tasks. If a conflict of interest arises between existing 

and new tasks, there should be sufficient mitigation in place to adequately address that conflict. 

Complementarity between the new task and existing central banking tasks should not, however, 

be interpreted  extensively,  so as to  lead to  the creation of an  indefinite chain  of ancillary tasks. 

Complementarity should also be examined from the point of view of the financing of those tasks. 

Second,  it should be assessed whether  without  new  financial resources the  performance of the 

new  task  is  disproportionate  to  the  financial  or  organisational  capacity  of  the  NCB  and  may 

negatively impact on its capacity to properly perform existing central banking tasks. 

Third,  it  should  be  assessed  whether  the  performance  of  the  new  task  does  not  fit  into  the 

institutional  set-up  of  the  NCB  in  the  light  of  central  bank  independence  and  accountability 

considerations. 

Fourth,  it  should  be  assessed  whether  the  performance  of  the  new  task  harbours  substantial 

financial risks. 

Fifth, it should be  assessed  whether the performance of the new task exposes the members of 

the  NCB’s  decision-making  bodies  to  political  risks  which  are  disproportionate  and  may  also 

impact  on  their  personal  independence  and,  in  particular,  the  guarantee  of  the  term  of  office 

under Article 14.2 of the Statute of the ESCB. 

2.3.3  Any  final  assessment  on  the  qualification  of  a  task  given  to  an  NCB  as  either  falling  within  the 

scope of a central banking task or a government task will be guided by the objective of ensuring 

the consistent application of the prohibition of monetary financing within the Eurosystem and the 

ESCB to the extent that it applies to its members. 

3.  

Specific observations 

3.1  

Establishment of resolution funds within the Banca d’Italia 

3.1.1  

In  line  with  Article  105  of  Directive  2014/59/EU,  the  draft  legislative  decrees  provide  that  the 

funding of resolution funds may be ensured through loans and other forms of financial support in 

the  event  that  ordinary  ex  ante  and  extraordinary  ex  post  contributions  are  not  immediately 

accessible or sufficient. However, the ECB notes that the draft legislative decrees do not specify 

the  financial  institutions  or  the  third  parties  that  are  allowed  to  provide  financial  support,  the 

nature  of  eligible  financial  support  arrangements  or  the  terms  and  conditions  of  any  such 

arrangements.  The  ECB  underlines  that,  even  though  this  is  not  expressly  stated  in  the  draft 

legislative decrees, the Banca d’Italia is not authorised to provide any loan or financing under any 

circumstances  to  the  resolution  funds,  as  the  provision  of  such  financing  would  constitute  a 
government task in breach of the prohibition of monetary financing under the Treaty 14. 

3.1.2  The  draft  legislative  decrees  provide  that  where  a  bridge  institution  tool  or  the  asset  separation 

tools are used the capital of the bridge institution and of the asset management vehicle company 

are  wholly  or  partially  held  by  the  resolution  fund  or  public  bodies.  While  this  provision 

14  

See paragraph 3.1.4 of Opinion CON/2015/22. 

7 

 
                                                 
ECB-PUBLIC 

implements  Directive  2014/59/EU15,  where  a  resolution  fund  established  within  a  central  bank 

holds such capital, it should be clarified, for the avoidance of doubt, that the central bank will not 

employ its resources, other than those collected in the resolution fund, to assume or finance any 
obligation  of  these  entities 16.  The  role  of  a  resolution  fund  established  within  a  central  bank  as 

owner  of  such  an  entity  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  3603/9317,  which  prohibits,  inter  alia,  any  financing  by  a  central  bank  of  the  public  sector’s 

obligations  vis-à-vis  third  parties.  Moreover,  this  role  must  be  performed  without  prejudice  to 
central  bank  independence,  in  particular  its  financial  and  institutional  independence 18.  The 

principle of financial independence requires NCBs to have sufficient means to carry out not only 

their  ESCB-related  tasks from  an  operational  and  financial  point  of  view,  but  also  their  national 
tasks19.  For  that  reason,  it  should  be  ensured  that  if  a  resolution  fund  established  within  the 

Banca d’Italia becomes the owner of such an entity, sufficient financial and human resources are 

provided to address the operational burden associated with it. 

3.2 

Conferral of resolution tasks on the Banca d’Italia 

The draft legislative decrees designate the Banca d’Italia as the resolution authority, broadening 

its  responsibilities  so  as  to  include  the  power  to  propose  placing  obliged  entities  into  resolution 

and to take resolution measures in respect of such entities. In the light of the guidance set out in 

paragraph  2.3,  it  must  be  assessed  carefully  whether  the  Banca  d’Italia’s  new  tasks  and 

responsibilities in this field could constitute a breach of the monetary financing prohibition. 

3.2.1  New tasks 

The ECB notes that whilst the Banca d’Italia has had for many years powerful tools to intervene 

in distressed financial institutions which pose a risk to financial stability, principally in the form of 

the special administration regime, the draft legislative decrees introduce specific, new resolution 

tools,  such  as  the  bail-in,  bridge  institution  and  asset  management  vehicle  tools,  which  in  their 

proposed  form  do  not  currently  exist  in  Italian  law,  as  well  as  expanded  ancillary  powers  which 

did not exist as separate resolution measures or powers in the past. The draft legislative decrees 

thus  introduce  substantial  legislative  amendments  to  the  Banca  d’Italia’s  existing  resolution-

related  tasks  that  are  currently  categorised  as  central  banking  tasks,  and  should  therefore  be 

assessed in the light of the monetary financing prohibition.  

3.2.2   Principle of 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  and  financial  point  of  view,  but  also  their 

15  
16  
17  

18  

19  

See Articles 40(2)(a) and 42(2)(a) of Directive 2014/59/EU. 

See paragraph 3.4.2 of Opinion CON/2015/25. 
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). 
See  paragraph  3.3  of  Opinion  CON/2012/99,  paragraph  5  of  Opinion  CON/2011/84  and  paragraph  3.6  of  Opinion 
CON/2011/39. 

See the ECB’s 2014 Convergence Report, p. 25. 

8 

                                                 
ECB-PUBLIC 

national tasks20. Hence, the provisions of the draft legislative decrees authorise the Banca d’Italia 

to  anticipate  allowances  due  to  special  commissioners  and  members  of  the  supervisory 
committee  and  then  recover  such  expenses  from  the  institutions  concerned21  in  order  to 

safeguard the Banca d’Italia’s financial independence. 

Furthermore, the ECB notes that the Banca d’Italia, before deciding to place an obliged credit or 

financial  institution  into  resolution  or  compulsory  administrative  liquidation,  is  required  to  obtain 

the  MoF’s  prior  approval.  However,  the  ECB  understands  that  the  liability  for  damages  arising 

due  to  gross  negligence  or  wilful  misconduct  under  the  Consolidated  Law  on  Banking  remains 

with  the  Banca  d’Italia  and  its  staff,  while  the  MoF  will  also  be  liable  in  accordance  with  the 

general liability regime of the State.  

3.2.3  Links to tasks listed in Article 127(2), (5) and (6) of the Treaty  

Administrative resolution tasks are considered tasks related to those referred to in Article 127(5) 

of  the  Treaty,  based  on  the  understanding  that  administrative  resolution  tasks  and  supervisory 

tasks complement each other, particularly where, as in this case, an NCB has a mandate for the 

stability  of  the  financial  system,  or  where,  as  in  this  case,  the  designated  resolution  authority 

already  has  certain  responsibilities  in  connection  with  the  supervision  of  credit  and  financial 

institutions. 

3.2.4  Atypical tasks 

A number of Member States have conferred on their NCBs a significant role in the resolution of 

financial  institutions,  whether  as  the  resolution  authority  or  as  a  competent  authority  in  the 

decision-making process for resolution. The ECB has generally welcomed the allocation of such 

tasks to NCBs provided they do not interfere financially and operationally with the performance of 
the NCB’s  ESCB-related tasks22. The resolution tasks of an NCB can therefore be regarded as 

being tasks not atypical of a central bank, particularly if, as in the case of the Banca d’Italia, it has 

had  for  many  years  powerful  tools  to  intervene  in  distressed  financial  institutions  which  pose  a 

risk to financial stability. 

3.2.5  Discharge of tasks on behalf of and in the exclusive interest of the Government or of other public 

entities 

Whilst  the  Banca  d’Italia  is  designated  as  the  sole  resolution  authority  and  takes  resolution 

measures acting as an administrative authority in the exercise of public functions in its own name, 

and not on behalf of any other authority, as noted in paragraph 3.3.2 above, it is required, before 

deciding  to  place  an  obliged  credit  or  financial  institution  into  resolution  or  compulsory 

administrative liquidation, to obtain the MoF’s prior approval. There is, however, no indication that 

in discharging its resolution function the Banca d’Italia acts exclusively in the interests of the MoF 

or another public entity.  

20  
21  
22  

See the ECB’s  Convergence Report, 2014, p. 25. 
See para. 3.2.2. 
See paragraph 2.3  of Opinion  CON/2015/22, paragraphs 2.1 and  3.2.4 of Opinion CON/2015/22, paragraph 4.1  of 
Opinion  CON/2014/60,  paragraph  2.1  of  Opinion  CON/2013/73,  paragraph  2.3  of  Opinion  CON/2011/72, 
paragraph 2.2 of Opinion CON/2011/83, and paragraph 2.2 of Opinion CON/2011/39.  

9 

                                                 
ECB-PUBLIC 

3.2.6  Extent to which conflict of interests with existing Banca d’Italia tasks are addressed 

The  ECB  has  repeatedly  noted23,  in  line  with  Directive  2014/59/EU 24,  that  staff  involved  in 

carrying out the functions of a resolution authority in accordance with Directive 2014/59/EU must 

be structurally separate and subject to separate reporting lines from the staff involved in carrying 
out prudential banking supervision tasks pursuant to applicable EU legal acts 25 or with regard to 

the  other  functions  of  the  relevant  authority.  Directive  2014/59/EU  ‘exceptionally’  allows  one 

authority  to  carry  out  both  resolution  and  supervisory  functions  on  the  condition  that  adequate 

structural  arrangements  are  put  in  place  in  order  to  ensure  operational  independence  and  to 

avoid conflicts of interest between that authority’s resolution function and its other functions. For 

example,  Directive  2014/59/EU  envisages  structural  separation  being  achieved  by  keeping  the 

reporting lines for staff involved in carrying out resolution tasks separate from those used by staff 
involved  in  supervision  activities 26.  Pursuant  to  the  draft  legislation,  the  Banca  d’Italia,  in  full 

compliance  with  the  principle  of  independence,  shall  provide  appropriate  arrangements  for  the 

separation of crisis management tasks from other tasks, to ensure the operational independence 

of the Banca d’Italia, and shall establish cooperation and coordination arrangement between the 
structures involved27.  

3.2.7  Extent  to  which  the  performance  of  tasks  is  proportionate  to  the  Banca  d’Italia’s  financial  and 

operational capacity and its ability to perform its ESCB-related tasks 

3.2.7.1  In line with Article 37(7) of Directive 2014/59/EU, the draft legislative decrees authorise the Banca 

d’Italia to advance the allowances of commissioners and members of the supervisory committee 

of an institution placed into resolution, and then recover these advances out of the amounts paid 

in exchange for the transfer of shares and other equities from the entity under resolution or from 

the surplus, if any, of the bridge institution or the asset management vehicle company. Claims for 

such  allowances  enjoy  general  priority  and,  in  case  of  insolvency,  are  treated  as  preference 

claims in liquidation proceedings.  

3.2.7.2  Also,  where  a  bank  is  placed  into  compulsory  administrative  liquidation  and  liquid  financial 

resources  are  not  available  or  insufficient,  costs  and  allowances  related  to  provisional 

management,  special  administration  or  voluntary  winding  up  are  paid  in  advance  by  the  Banca 

d’Italia. Advance payments are then recovered from the financial resources available to the credit 

institution, after reimbursement of the clients entitled to restitution of financial instruments held on 

custody  by  the  credit  institution,  and  before  the  payment  of  other  preference  claims.  Costs  of 

proceedings in relation to compulsory administrative liquidation may be also paid in advance by 

23  

24  
25  

26  

27  

See paragraph 4.3 of Opinion CON/2015/2, paragraphs 5.1 and 5.2 of Opinion CON/2015/3,  and paragraph 3.3 of 
Opinion CON/2014/67. 
See the second subparagraph of Article 3(3) of Directive 2014/59/EU. 

Regulation  (EU)  No.  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1), and Directive No. 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on 
access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, 
amending  Directive  2002/87/EC  and  repealing  Directives  2006/48/EC  and  2006/49/EC  (OJ  L  176,  27.6.2013, 
p. 338). 
See Opinion CON/2014/67, paragraph 3.1.  

Article 3(6). 

10 

                                                 
ECB-PUBLIC 

the Banca d’Italia where financial resources are not available. 28 Such advance payments are then 

recovered from the available liquid financial resources with priority over other preference claims 
(and then from clients’ available financial resources) 29.  

3.2.7.3  As  noted  in  paragraph  3.2.2,  in  order  to  remain  financially  independent,  NCBs  must  have 

sufficient means to carry out not only their ESCB-related tasks from an operational and financial 

point of view, but also their national tasks. 

3.2.8  Extent  to  which  the  performance  of  tasks  fits  into  the  Banca  d’Italia’s  institutional  set-up  in  the 

light of central bank independence and accountability considerations 

As  noted  above,  the  Banca  d’Italia  is  required,  before  deciding  to  place  an  obliged  credit  or 

financial  institution  into  resolution  or  compulsory  administrative  liquidation,  to  obtain  the  MoF’s 

prior  approval.  The  Banca  d’Italia  and  the  MoF  shall  agree  the  practical  arrangements  for  the 

timely  sharing  of  information  in  order  to  ensure  the  efficiency  and  effectiveness  of  crisis 

management. The ECB considers that the broadened resolution tasks that the Banca d’Italia will 

assume  under  the  draft  legislative  decrees  entail  closer  cooperation  with  the  MoF  than  for  the 

exercise of its other functions.  

3.2.9  Extent to which the performance of tasks involves substantial financial risks 

The  draft  legislative  decrees  stipulate  that  the  Banca  d’Italia,  the  members  of  its  bodies  and  its 

staff  are  liable  for  damages  caused  by  gross  negligence  or  wilful  misconduct  in  the  course  of 
discharging their functions under the Consolidated law on Banking 30. The ECB understands that 

liability could attach even if the  Banca d’Italia had obtained prior approval from the MoF for the 

improper resolution measure. However, as noted above, the ECB understands that the MoF will 

also be liable for its decisions.  

3.2.10  Conclusion 

The ECB considers that there are grounds for regarding the Banca d’Italia’s expanded resolution 

tasks  as  central  banking  tasks,  in  the  sense  that  they  complement  the  Banca  d’Italia’s  existing 

supervisory  functions.  The  fact  that  the  Banca  d’Italia  will  be  authorised  to  recover  advance 

payments made for allowances from the institutions concerned should also mitigate their impact 

on  its  financial  independence.  In  addition,  even  though  the  draft  legislative  decrees  may  create 

financial risks for the Banca d’Italia in terms of liability for damages incurred in the performance of 

the new resolution tasks, these risks will be mitigated by the provision whereby the Banca d’Italia 

will be liable, along with the members of its management bodies and its staff, only for damages 

incurred  as  a  consequence  of  its  acts  or  omissions  constituting  gross  negligence  and  wilful 

misconduct,  while  the  MoF  will  be  liable  for  its  decisions  also  in  the  approval  of  the  Banca 

d’Italia’s resolution measures.  

28  
29   
30  

See paragraph 1.14. 
Article 1(35) of the Amending Decree. 
Article  1(2)  amending  the  Consolidated  Law  on  Banking  by  reference  to  Article  24(6-bis)  Law  No  262  of 
28 December 2005. 

11 

                                                 
ECB-PUBLIC 

3.3 

The MoF’s role in resolutions 

In  requiring  the  Banca  d’Italia  to  obtain  the  MoF’s  prior  approval  before  deciding  to  place  an 

obliged  credit  or  financial  institution  into  resolution  or  compulsory  administrative  liquidation,  the 

question  arises  as  to  whether  the  MoF  may  be  considered  to  be  a  second  resolution  authority 

alongside  the  Banca  d’Italia.  The  consulting  authority  is  invited  to  consider  whether  the  MoF’s 

prior  consent  should  be  more  appropriately  limited  to  those  cases  in  which  the  resolution 

measures  have  a  direct  fiscal  impact  or  systemic  implications,  as  required  by  Article  3(6)  of 

Directive  2014/59/EU.  This  would  avoid  the  MoF  acting  de  facto  as  joint  resolution  authority 

alongside  the  Banca  d’Italia,  since,  if  this  were  the  case,  the  MoF  would  need  to  ensure  the 
operational independence of its resolution function 31. 

3.4  

Resolution planning  

The  draft  legislative  decrees  stipulate  that  the  evaluation  of  resolvability  and  resolution  plans 

must  not  assume  the  granting  of  extraordinary  public  financial  support  except  the  use  of  the 

resources of the resolution funds, nor the granting of central bank emergency liquidity assistance, 

nor  central  bank  liquidity  assistance  provided  under  non-standard  collateralisation,  tenor  and 
interest  rates  terms32.  While  this  appears  to  be  in  line  with  the  requirements  of  Directive 

2014/59/EU, the ECB emphasises that these provisions do not in any way affect the competence 

of  central  banks  to  decide  independently  and  in  their  full  discretion  on  the  provision  of  central 

bank  liquidity  to  solvent  institutions,  both  through  standard  monetary  policy  operations  and 

emergency  liquidity  assistance,  within  the  limits  imposed  by  the  monetary  financing  prohibition 
under the Treaty33. 

3.5  

Determination of failing or likely to fail 

The draft legislative decrees stipulate that the Banca d’Italia, acting as resolution authority, may 

also determine autonomously that an institution is failing or likely to fail in line with Article 32(2) of 

Directive 2014/59/EU. The ECB notes that Directive 2014/59/EU assigns the failing or likely to fail 

assessment  also  to  the  respective  supervisory  authority,  i.e.  the  ECB  or  national  competent 

authorities,  in  line  with  the  distribution  of  competences  provided  for  in  Regulation  (EU) 

No 1024/2013. The ECB also notes that, pursuant to Article 9(1), subparagraph 2, Article 4(1)(e) 

and  Article  4(3)  of  Council  Regulation  (EU)  No  1024/2013,  and  Article  104(1)(b)  of 

Directive 2013/36/EU of the European Parliament and of the Council, the ECB shall have all the 

powers  of  the  competent  and  designated  authorities  under  the  applicable  Union  law  to  ensure 
compliance with regard to significant institutions 34. 

3.6 

Establishment of a bridge institution 

Pursuant  to  the  draft  legislative  decrees,  and  in  line  with  Article  41(1)  of  Directive  2014/59/EU, 

the  Banca  d’Italia  approves  a  bridge  institution’s  memorandum  of  association  and  articles  of 

association,  the  appointment  of  the  members  of  its  management  and  supervisory  bodies,  their 

31  
32  
33  
34  

See paragraph 3.1.2 of Opinion CON/2015/25 and paragraph 3.3 of Opinion CON/2015/22. 
Articles 12(3) and 102(2) of the Implementing Decree. 
See paragraph 3.2 of Opinion CON/2012/99 and paragraph 3.3 of Opinion CON/2014/67. 

See paragraph 3.3 of Opinion CON/2015/19. 

12 

                                                 
ECB-PUBLIC 

remuneration  and  any  conferral  of  delegations,  and  may  impose  restrictions  on  its  activity  to 

ensure compliance with applicable legislation on State aid. 

In  this  respect,  the  ECB  underlines  that  under  Regulation  (EU)  No  1024/2013  provisions  in 

relation  to  the  ECB’s  responsibilities  with  regard  to  the  authorisation  of  a  credit  institution  to  be 
established in a participating Member State35 the banking licence necessary for the access to the 

activity  of  credit  institutions  by  the  bridge  institution  is  to  be  granted  solely  by  the  ECB 

irrespective of the context and the size of the institution which is being created. .. 

Additionally, if the bridge institution is not able to comply with the requirements for authorisation 

from the intended start of its operations, then the resolution authority shall request a temporary 

exemption  from  some  or  all  of  these  requirements.  The  ECB  will  assess  the  request  and  if  it 

decides to grant such an authorisation, it shall indicate the period for which the bridge institution 
is waived from complying with the relevant requirements.36  

Furthermore, the bridge institution is wholly or partially owned by one or more public bodies which 

may include the resolution funds. The remainder of the ownership may be held by third parties. In 

this respect an assessment of the resulting qualifying holdings might be necessary. In this case 

the  ECB  would  need  to  take  a  decision  on  the  qualifying  holdings  before  the  start  of  the 
operations of the bridge institution37. 

3.7 

Depositor preference 

3.7.1  The  ECB  notes  that  the  draft  legislative  decrees  confer  a  preference  not  only  on  claims  arising 

out  of  deposits  guaranteed  under  the  deposit  guarantee  scheme  (including  claims  of  deposit 

guarantee  schemes  subrogated  to  depositor  claims)  and  deposits  above  the  guaranteed 

threshold  of  private  individuals  and  micro,  small  and  medium-sized  enterprises,  but  also  on  all 

other  deposits.  Conferring  a  priority  ranking  on  all  deposits  is  expected  to  enhance  the 

implementation  of  the  bail-in  tool  in  resolution,  because  the  resolution  authority  will  be  able  to 

bail-in other senior unsecured bank debt instruments prior to deposits, while minimising the risk of 

compensation claims under the ‘no-creditor-worse-off-than-in-insolvency’ principle. The bail-in of 

such  senior  unsecured  bank  debt  instruments  is  perceived  to  carry  a  lower  contagion  risk  than 

that of operational liabilities such as deposits. A general depositor preference is therefore likely to 

render  the  bail-in  of  senior  unsecured  bank  debt  more  effective  and  credible,  thus  fostering 

effective resolution action and reducing the need to have recourse to the resolution fund.  

3.7.2  The ECB understands from the explanatory memorandum accompanying the draft law, that one 

motivation  of  introducing  the  depositor  preference  is  to  make  it  easier  for  Global  Systemically 

Important  Banks  (G-SIBs)  to  meet  the  forthcoming  Total  Loss  Absorbing  Capacity  (TLAC) 
requirement, as foreseen in the Financial Stability Board’s draft proposal on G-SIBs38. This would 

notably  be  the  case  if  other  senior  unsecured  bank  debt  became  eligible  to  count  as  TLAC. 

35  
36  
37  
38  

See Articles 4 and 14 of Regulation (EU) No 1024/2013. 

See Article 41(1), subparagraph, of Directive 2014/59/EU. 
See Article 15 of Regulation (EU) No 1024/2013. 
It  should  be  noted  that  the  TLAC  proposals  are  still  under  discussion,  particularly  in  light  of  the  ongoing  impact 
assessment. 

13 

                                                 
ECB-PUBLIC 

However,  the  ECB  notes  that  the  depositor  preference  does  not  address  the  fact  that  other 

operational  liabilities,  such  as  derivatives,  still  rank  pari  passu  to  senior  unsecured  bank  debt 

instruments. In this respect, the ECB notes that TLAC eligibility in the draft FSB proposal would 

require subordination with respect to all TLAC excluded liabilities, not only deposits.  

3.7.3  A common framework at Union level on the scope of the depositor preference in bank resolution 

and/or  insolvency  proceedings  may  help  to  avoid  fragmentation  of  the  market  within  the  Union 

and  avoid  complicating  the  tasks  of  the  ECB  both  with  regard  to  monetary  policy  and  to 
supervision within the Single Supervisory Mechanism39.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 16 October 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

39  

See paragraph 3.4 of Opinion CON/2015/31. 

14