Commissioner Barnier welcomes the Signature of the intergovernmental Agreement (IGA) on the Single Resolution Fund

Brussels, 21 May 2014 — Today, 26 Member States have signed the Agreement on the transfer and mutualisation of contributions to the Single Resolution Fund (SRF), an essential part of the Single Resolution Mechanism (SRM) – STATEMENT/14/119. This is an important signal of the commitment of Member States, to make the banking union a success.

The Agreement signed today is a key component of the SRM as it is the pre-requisite to the application of certain provisions in the SRM Regulation.

The IGA was part of the overall compromise reached by the Member States and the European Parliament on the SRM.

Together, we have turned the idea of a banking union into reality in less than two years. We must now keep up this momentum to make it fully operational without delay.

I invite all signatories of the IGA to complete its ratification according to their national procedures before 1 January 2016.

Background

The Single Resolution Mechanism implements the Bank Recovery and Resolution directive (BRRD) in the eurozone and any other participating Member State in the Banking Union/ Resolution funds will be pooled into one Single Resolution fund, the so-called Single Resolution Fund (SRF).

Bank Recovery and Resolution Directive (BRRD)

The BRRD (IP/12/570) is the single rulebook for the resolution of banks and large investment firms in all EU Member States. It harmonises and upgrades the tools for dealing with bank crises across the EU.

National resolution funds are set up under BRRD. In the euro area Member States, they will be replaced by the Single Resolution Fund as of 2016. The European Commission will adopt a delegated act related to the banks’ contributions to the national resolution funds under this Directive. That act will then be subject to a right of objection by Council and Parliament within three months extendable by a further three months.

More info, see MEMO/14/297

Single Resolution Mechanism (SRM)

The Single Resolution Mechanism (IP/13/674) will complement the Single Supervisory Mechanism (SSM, IP/12/953) and will ensure that – notwithstanding stronger supervision – if a bank subject to the SSM faces serious difficulties, its resolution can be managed efficiently with minimal costs to taxpayers and the real economy. The SRM will apply to all banks in the euro area and other Member States that decide to participate. It is governed by two texts: a Single Resolution Mechanism regulation covering the main aspects of the mechanism (see MEMO/14/295) and an intergovernmental agreement (IGA) related to some specific aspects of the Single Resolution Fund (SRF). The IGA is open to all Member States because the SRM is a Regulation based on Article 114 of the Treaty on the Functioning of the European Union, and thereby applies to all 28 Member States.

The fund will ensure the availability of medium-term funding to enable the bank to continue operating while it is being restructured. It has a target level of €55 billion and can borrow from the markets if decided by the Single Resolution Board. It will reach the target level over eight years, starting in 2016. During that transitional period, there will be national compartments which will be progressively merged.

The Fund and the decision-making on its use is regulated by the SRM Regulation. The contributions to the Single Fund will also be calculated by the Board under the SRM Regulation. However, the contributions will be collected and transferred by the national resolution authorities in accordance with the IGA. The IGA will also regulate the progressive mutualisation of the national compartments during the transitional period. Indeed, the resources accumulated will be progressively mutualised, starting with 40% of these resources in the first year. The United-Kingdom and Sweden have decided not to sign the inter-governmental agreement at this stage but they can choose to do so anytime in the future.

NEXT STEPS

In order to become law, the Council must formally adopt the SRM regulation.

The SRM would enter into force on 1 January 2015 once published in the OJ, whereas the transfers of banks’ contribution to the Single Resolution Fund will start from 1 January 2016.

The European Commission will adopt in coming months a proposal for a Council implementing act on the banks’ contributions to the Single Resolution Fund, which will specify the calculation methodology of the contributions. The act will have to be discussed and adopted by the Council.

FOR MORE INFORMATION ABOUT THE BANKING UNION:

See MEMO/14/294 for general information about the banking union and consult the website:

http://ec.europa.eu/internal_market/finances/banking-union/index_en.htm

http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm

http://ec.europa.eu/internal_market/bank/guarantee/index_en.htm

Text of the intergovernmental Agreement