ARBEJDSDOKUMENT FRA KOMMISSIONENS TJENESTEGRENE RESUMÉ AF RAPPORTEN OM KONSEKVENSANALYSEN Ledsagedokument til Forslag til EUROPA-PARLAMENTETS OG RÅDETS DIREKTIV om ændring af direktiv 2014/59/EU for så vidt angår foranstaltninger i forbindelse med tidlig indgriben, betingelser for afvikling og finansiering af afviklingsforanstaltninger

EN EN
EUROPEAN
COMMISSION
Strasbourg, 18.4.2023
SWD(2023) 226 final
COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT
Accompanying the
Proposals for a
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND COUNCIL
amending Directive 2014/59/EU as regards early intervention measures, conditions for
resolution and financing of resolution action
REGULATION OF THE EUROPEAN PARLIAMENT AND COUNCIL
amending Regulation (EU) 806/2014 as regards early intervention measures, conditions
for resolution and financing of resolution action
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND COUNCIL
amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit
guarantee schemes funds, cross-border cooperation, and transparency
{COM(2023) 226-228 final} - {SWD(2023) 225 final} - {SEC(2023) 230 final}
Offentligt
KOM (2023) 0227 - SWD-dokument
Europaudvalget 2023
1
Executive Summary Sheet
Impact assessment on the review of the bank crisis management and deposit insurance (CMDI)
framework (Bank Recovery and Resolution Directive (BRRD), Single Resolution Mechanism
Regulation (SRMR), Deposit Guarantee Scheme Directive (DGSD))
A. Need for action
Why? What is the problem being addressed?
The crisis management and deposit insurance (CMDI) framework was designed to avert and manage the failure
of credit institutions of any size or business model. Its objectives are to maintain financial stability, protect
depositors, minimise the use of public support, limit moral hazard and ensure a level playing field in the single
market, while avoiding value destruction. Overall, the evaluation concluded that the CMDI framework is
functioning effectively for some objectives (protecting financial stability), but underperforming for other objectives
(protecting taxpayers' money and depositors, and ensuring a level playing field in the single market). Therefore,
improvements are needed, in particular to the following issues:
- Legal certainty and predictability in managing bank failures remain wanting. For example, public
authorities' decision on whether to resort to resolution or insolvency tools can differ considerably across
EU Member States.
- Industry financed safety nets remain ineffective and divergent access conditions to funding in resolution
and outside resolution persist, impacting incentives and creating arbitrage opportunities when deciding
on the crisis management tool to use in order to better protect deposits.
- Depositor protection remains uneven and inconsistent across EU Member States and Deposit
Guarantee Scheme (DGS) funding may prove to be insufficiently robust, in particular in the absence of a
European Deposit Insurance Scheme (EDIS).
What is this initiative expected to achieve?
Taking into account these issues, the CMDI review aims to better meet all the fundamental objectives of the
framework by:
- preserving financial stability and the continuity of banks’ critical functions for society;
- protecting depositors and ensuring consumer confidence;
- safeguarding the functioning of the single market and ensuring a level playing field across the EU;
- minimising recourse to taxpayers' money and ensuring market discipline.
What is the value added of action at the EU level?
The review will amend EU legislation (the BRRD, the SRMR and the DGSD). The proposed amendments are
justified at EU level because of the strong links between national financial sectors and the risk of contagion and
spillovers; the cross-border nature of many financial institutions’ business; and the systemic impact that the
failure of any bank may have on financial stability (even small and medium-sized banks). Only EU action can
provide national and European resolution authorities with the appropriate tools and powers to manage failing
banks of all sizes and business models in an orderly manner. EU action can be taken through the harmonised
resolution framework when national insolvency proceedings are deemed inappropriate to protect depositors,
taxpayers' money and financial stability. EU action can also ensure a level playing field, an improved single
market for banking services and equal treatment for all depositors and banks across the EU. At the same time,
EU action does not impose a certain strategy to be chosen for failing banks, rather it provides national and
European authorities with a consistent framework to make the appropriate and proportionate decisions on case-
by-case basis.
B. Solutions
What legislative and non-legislative policy options have been considered? Is there a preferred
choice or not? Why?
Given the strong links between the crisis management toolbox and its funding, the impact assessment
considered packages of policy options. These packages of policy options bundle together the CMDI framework’s
relevant design features to ensure a comprehensive and consistent approach. Some changes proposed on early
intervention measures, the triggers to determine a bank failing or likely to fail, and the harmonisation of certain
features of the DGSD, are common features across the option packages that were considered.
2
The different packages of policy options are mainly focused on analysing the possibilities to broaden credibly
and effectively the scope of resolution, in function of the level of ambition in making the funding in resolution
more accessible. In particular, the policy options consider easing the use of DGS funds in resolution, including to
serve as a ‘bridge’ under the least cost test safeguard, to improve the proportionality in accessing the national
resolution funds / Single Resolution Fund (RF/SRF) for banks, in particular smaller and medium-sized banks that
are being subject to transfer strategies with market exit. They also explore the possibility of using DGS funds
more effectively and efficiently under a harmonised least cost test for measures other than the payout of covered
deposits in insolvency. This approach seeks to improve the compatibility of incentives for resolution authorities
when selecting the most appropriate tool to manage a crisis. Unlocking DGS funds for measures other than the
payout of covered deposits depends on the DGS ranking in the hierarchy of claims. Therefore, the policy options
also explore different scenarios for the harmonisation of depositor preference in the hierarchy of claims.
The policy options deliver outcomes ranging from slightly improved resolution funding, and a commensurate
resolution scope (Option 2) to more ambitious improvements in the funding equation, opening the possibility for
a more substantial broadening of the resolution scope to include more smaller and medium-sized banks (Option
3) relative to Options 1 (baseline) and 2. Option 4 consists of an ambitious reform of the CMDI framework,
including EDIS (an intermediate, hybrid EDIS model, different from the 2015 Commission proposal). While the
Eurogroup have yet to reach a consensus on the way forward on EDIS, most EU Member States and the
European Parliament acknowledge the work carried out at technical level and the importance of establishing
EDIS for the robustness of the framework and the completion of the Banking Union. It is therefore included in
this option for technical completeness and consistency of the policy design, although it has been assessed as
politically unfeasible at this stage.
The ambitious yet realistic improvements to the CMDI framework under Option 3, in particular, its funding
equation coupled with a commensurate resolution scope and aligned incentives for deciding on the best crisis
tool for smaller and medium-sized banks, make this the preferred option (in the absence of political agreement
on EDIS).
Who supports which option?
Most EU Member States support the principle of broadening the resolution scope to certain smaller and medium-
sized banks when resolution would best achieve the objectives of the framework, by clarifying the public interest
assessment, provided credible access to funding in resolution for these types of banks is ensured. They favour
integrating more proportionality in the rules to access funding with the help of the DGS under a harmonised least
cost test and preserving the minimum bail-in access condition to resolution funding.
Overall, depositors and consumers support a framework placing more banks in resolution and benefiting from
industry-funded safety nets, which would reduce the risk of losses being imposed on deposits, while mitigating
the recourse to taxpayers' money.
Banks, in general, see merit in clarifying the CMDI framework; however they also expressed concerns. On one
hand, some smaller banks are concerned about potential costs that an expanded resolution scope, coupled with
possible (proportionate) MREL requirements and a broader use of industry-funded safety nets may entail. On
the other hand, larger banks support a broader application of resolution and underline the need to build MREL
buffers. However, they are critical of the prospect of using the safety nets, especially for resolving smaller and
medium-sized banks.
Most EU Member States are in favour of EDIS and regret the missed opportunity to exploit the synergies with the
CMDI framework in this review. Overall, the industry also favours an EDIS, in particular for the potential cost
efficiencies that could lead to lower contributions to safety nets.
C. Impacts of the preferred option
What are the benefits of the preferred option (if any, otherwise main ones)?
Each of the three packages of policy options aims to create an incentive-based framework by encouraging the
application of resolution tools in a more consistent manner, increasing legal certainty and predictability, levelling
the playing field, facilitating access to common safety nets, while maintaining some alternatives outside
resolution under national insolvency procedures. However, by design, the packages of options achieve these
objectives to a different extent and their political feasibility differs.
3
What are the costs of the preferred option (if any, otherwise main ones)?
The different elements of the three policy options would result in different levels of costs and distribution of costs.
Banks earmarked for resolution would continue to comply with the requirement to ensure adequate levels of
internal loss absorbing capacity and become more resolvable. Whether the expansion of the resolution scope
would translate into higher costs for banks that would transition from being considered for liquidation to being
earmarked for resolution is a case-by-case assessment. A mitigating factor for the public and society as a whole
would be the preservation of asset value (due to the facilitation of transfer strategies with orderly market exit),
reduced recourse to taxpayer money and avoiding the bail-in of depositors by a more extensive use of DGS
under the least cost-test safeguard. However, using the DGS funds and the RF/SRF may also trigger
replenishment needs through ex post contributions from the industry, which, in the absence of EDIS, would not
be compensated by any discounts in banks’ contributions to the safety nets.
For consumers and depositors (including small and medium-sized enterprises (SMEs)) the costs should be
limited and clearly outweighed by the benefits. In particular, through increased depositor protection, financial
stability, better preservation of value through safeguarding banking critical functions and reduced use of
taxpayers' money.
How will businesses, SMEs and micro-enterprises be affected?
Given banks’ central role in providing funding and financial services to consumers and SMEs, improved stability
of the banking sector through the CMDI reform should benefit these groups, both as regards their access to
financing as well as their protection as depositors.
Will there be significant impacts on national budgets and administrations?
An objective of the CMDI reform is to further reduce recourse to taxpayers' money when handling the failure of
banks. On one hand, the administrative burden might increase somewhat for administrations (resolution
authorities i.e., preparation of more resolution plans and issuing of more administrative decisions). On the other
hand, administrations would benefit from more legal certainty and predictability of outcomes when carrying out
resolution actions or in the application of the appropriate crisis management tools outside resolution.
Will there be other significant impacts?
No.
D. Follow up
When will the policy be reviewed?
The legislation will undergo a full evaluation five years after its implementation deadline to assess how effective
and efficient it has been in terms of achieving the objectives presented in this report, and to decide if new
measures or amendments are needed.