EN 22 1 2020 Official Journal of the European Union C 22/3 EXECUTIVE SUMMARY I The Single Resolution Mechanism (SRM) is the EU system for managing the resolution of failing banks in the euro area The key player is the Single Resolution Board (SRB), an EU body based in Brussels It administers the Single Resolution Fund, which can be used to support bank resolutions Other key players in the resolution process are the European Commission and Council of the European Union II We have an obligation to report annually on any contingent liabilities of the SRB, the Commission, or the Council arising from the performance of their resolution tasks Contingent liabilities and provisions reflect the financial risk to which they are exposed III A contingent liability is an obligation arising from past events whose existence will be confirmed by future events; or a present obligation which is not recognised either because it is improbable that there will be an outflow of resources, or because the amount cannot be measured with sufficient reliability In practice, if an outflow of resources is not assessed as being remote, a contingent liability needs to be disclosed IV At end-2018 there were outstanding judicial proceedings in EU courts against the SRB and the Commission (but not the Council) concerning their resolution tasks, which could generate contingent liabilities These numbered 104 in total, of which one was against the Commission only, 74 against the SRB only, and the remaining 29 against both Our audit involved a review of a sample of documents related to litigation against the SRB and the Commission, as well as representations concerning proceedings at national level V Ń Ń Two actions by the SRB are being challenged in the EU courts: In June 2017, the SRB adopted a resolution scheme in relation to Banco Popular Espaol S A , which was endorsed by the Commission The scheme involved a write-down and conversion of capital instruments, together with the sale of the bank for one euro These actions are subject to more than one hundred judicial proceedings from impacted creditors and shareholders seeking annulment or damages In February 2018, the SRB decided not to take resolution action in respect of ABLV Bank AS and ABLV Bank Luxembourg VI remote We found no evidence that would contradict the SRBŐs assessment However, the SRBŐs assessment was not made on the basis of any reasons or supporting arguments In all of the above cases, the SRB decided not to disclose a related contingent liability, as it assessed the related risks as VII The resolution of Banco Popular Espaol S A was implemented at national level by the Spanish National Resolution Authority (Fondo de Reestructuracin Ordenada Bancaria) The Spanish National Resolution Authority is facing legal proceedings at national level and the SRB did not disclose any related contingent liabilities based on the National Resolution Authorities reporting, as these proceedings largely depend on the outcome of proceedings at EU level VIII Following the resolution of Banco Popular Espaol S A , the SRB is carrying out a Ôright-to-be-heardŐ process for the shareholders and creditors affected, relating to any potential compensation under the no-creditor-worse-off principle As this process has not concluded, the SRB is not in a position to assess whether there are any related contingent liabilities IX The SRB also collects (via the National Resolution Authorities) ex-ante contributions to the Single Resolution Fund It has disclosed contingent liabilities of Ű50 million relating to legal proceedings to these contributions at EU level, and a further Ű40 million relating to legal proceedings to these contributions at national level We conclude that the SRB made a fair effort to disclose these cases as contingent liabilities, although several National Resolution Authorities stated that they were not in a position to assess whether contingent liabilities exist As no judicial proceedings were pending, the SRB did not disclose any contingent liabilities relating to the contributions it collects from banks to fund its administrative budget 
20 22 23 23 23 24 Punkt Sida SV 22.1.2020 Europeiska unionens officiella tidning C 22/3 SAMMANFATTNING I. Den gemensamma resolutionsmekanismen (SRM) r EU:s system fr att frvalta resolutionen av fallerande banker i euroomrdet.