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EU bank crisis management framework: can an agreement be achieved for medium-sized banks?

EU bank crisis management framework: can an agreement be achieved for medium-sized banks?

Day 2 Morning

Thursday 22 February

Room :

ROOM 2

Speakers

Chair
Anneli Tuominen
Member of the Supervisory Board - European Central Bank (ECB)
Public Authorities
Helmut Ettl
Executive Director - Austrian Financial Market Authority
Jacek Jastrzębski
Chair of the Board - Polish Financial Supervision Authority
Dominique Laboureix
Chair - Single Resolution Board (SRB)
Fernando Restoy
Chair - Financial Stability Institute (FSI)
Industry Representatives
Juan Poswick
Head of Recovery and Resolution - BNP Paribas
Johannes Rehulka
Managing Director & Secretary General, Austrian Raiffeisen Association - Raiffeisenbank International (RBI)
Karolin Schriever
Executive Member of the Board - Deutscher Sparkassen- und Giroverband (DSGV)

Objectives

On 18 April 2023, the European Commission published its proposal concerning the review of the BRDD, SRMR, DGSD and daisy Chains Directive – the Crisis Management and Deposit Insurance Proposal (CMDI).
The session will first discuss how to address the funding gap in resolution notably for small and medium sized banks whether or not they are under the remit of the SSM and SRB. Then the session will focus on the way forward for an agreement on a eurozone liquidity facility for banks in resolution.
If time allows, the panel will assess the policy measures and necessary changes in the European institutional framework that would ensure in all Member States a smooth exit from the market in case of Failing or Likely to Fail (FOLF) small and medium sized banks that do not pass the Public Interest Assessment (PIA).

Points of discussion

  1. Why extend the scope of resolution? What are the advantages of resolving banks rather than liquidating them? What will their MREL look like? Why do we need the DGS bridge? One of the most critical aspects of CMDI is the proposal to modify the hierarchy of claims in insolvency and to remove the DGS super priority. Is there a sufficiently strong case to support this relevant adjustment of the current EU crisis management framework? What are the financial implications of such regulatory evolutions for the banks? Are there alternative ways to increase funding without a single-tier? What would be the estimated quantitative impact of the CMDI reform on DGS and the SRF?
  2. The collapse of Banco Popular (2017) and the banking turmoil earlier this year have highlighted the need for a eurozone liquidity facility for banks in resolution: what are the challenges raised and the success factors in creating such an instrument (e.g. EU government guarantee…)? What should be the respective roles of the ECB, the SRB and the Eurogroup in this respect? How can we break the current political deadlock and move forward?
  3. What policy measures would ensure a smooth exit from the market of FOLTF small banks that do not pass the PIA in all Member States (whether or not they are under thee remit of the SSM and SRB)?