European Banking Union is used to describe the decisions passed in May 2014 transferring national competence to centralised institutions, and the creation of harmonised joint policies and rules in the areas of financial market supervision and the recovery or resolution of credit institutions within the European Union or the euro area.
One aim of the European Banking Union is to achieve greater transparency and stability in the European banking sector as well as to decouple sovereign debt from bank debt.
European Banking Union consists of several mechanisms. They are the Single Supervisory Mechanism (SSM ), the Single Resolution Mechanism (SRM ) as well as hopefully in the future the European Deposit Insurance System (EDIS ).
The three pillars of the banking union:
European banking resolution bodies at a glance
A separate resolution authority, the Single Resolution Board (SRB ) has been established at European level for resolution and resolution planning.
Further information about the principles of resolution, including resolution planning and resolution actions can be found here.
Further information about the FMA ’s role within the SRM can be found here.
In order to ensure the effective and consistent application SRB issues guidelines and addresses instructions to national resolution authorities on the drawing up of resolution plans and group resolution plans. The SRB has established various committees and networks for this purpose, who are involved in drawing up these Guidelines. These groups are made up, among others, of representatives of national resolution authorities, namely the FMA in Austria’s case, who work together with representatives from the SRB to draw up such Guidelines.
Further information can be found at: www.srb.europa.eu/en/content/srb-banking-union
The SRB consists of a Chair, four further full-time Board Members, and a designated member from every participating Member State, which in Austria’s case is one of the FMA ’s Executive Directors. The Commission and the ECB shall each designate a representative entitled to participate in the meetings of executive sessions and plenary sessions as a permanent observer. A representative of EBA may be invited as an Observer, especially in such cases where, in line with Directive 2014/59/EU, EBA is required to develop technical standards or to draw up Guidelines. Furthermore, the Secretariat with a staff of around 400 provides the necessary administrative and technical support on the performing of all the tasks assigned to the Board.
The SRB passes decisions in plenary and executive sessions.
All members participate at SRB plenary sessions, with the plenary deciding on the Annual Work Programme, the acceptance and oversight of the SRB ’s annual budget, utilisation of the Single Resolution Fund under certain conditions, signing off the annual activity report, adoption of financial provisions etc.
The Chair, the four full-time Board Members as well as where necessary the members from the respective affected Member States participate at the SRB Executive Sessions. Primarily, the Executive Session prepares all the decisions to be taken by the SRB Plenary Session and accepts all decisions for implementing the SRM Regulation, provided the Regulation itself does not state otherwise. The SRB generally takes decisions in relation to individual banks as well as policy decisions together with the national resolution authorities, but in the event that it is not possible to reach a consensus, then the SRB ’s full-time Board Members decide.
The SRB has established its own Appeal Panel. Natural or legal persons – including the national resolution authorities – may appeal against certain decisions by the SRB , where such decisions are addressed those persons, or where those persons are directly and individually affected.
Further information about the Appeal Panel.
The right of appeal may be exercised before the Courts of the European Union against Appeal Panel decisions or — in cases in which an appeal is unable to be submitted to the Appeal Panel — or SRB decisions. The Member States and the bodies of the European Union as well as every natural or legal person may exercise their right of appeal against SRB decisions. Ultimately, the Court of Justice of the European Union (CJEU) is always the final legal instance.
The BRRD also confers powers on the European Banking Authority (EBA), headquartered in Paris, to issue various Guidelines, Technical Standards or Opinions, with the objective of harmonised and consistent processes, especially with regard to financial institution that are active on a cross-border basis. These EBA Guidelines apply for all EU Member States. EBA is an independent EU authority, tasked with ensuring an effective and consistent level of regulation and supervision within the European banking sector. Its primary aims exist in maintaining financial stability in the EU as well as safeguarding the integrity, efficiency and the orderly functioning of the banking sector.
The various Guidelines etc. are decided upon by EBA ’s Board of Supervisors (BoS ), in which the Member State supervisory authorities are represented.
EBA has established a Resolution Committee (ResCo ), which the national resolution authorities are represented in – with Austria being represented by an Executive Board member of the FMA in its capacity as national resolution authority. ResCo is a standing committee, the purpose of which is the preparation of EBA decisions that are relevant to resolution, including decisions on draft implementing and regulatory technical standards for the tasks that are conferred upon the resolution authorities. It contributes towards the development and coordination of resolution plans and develops methods for the resolution of failing financial institutions.
Further information about EBA’s work.
Effective resolution of internationally active institutions and groups requires cooperation between European institutions, Member States and third-country resolution authorities. As stated under the BRRD , resolution colleges are established for these purposes – chaired by the resolution authority of the parent institution of a banking group – that are responsible for the resolution and resolution planning including the resolution concept and for prescribing MREL requirements for cross-border banking groups (Link to information about MREL ). Where a group consists both of entities in participating Member State in the Banking Union as well as in entities in non-participating Member States or third countries, then the SRB represents the national resolution authorities in the hearing of and cooperation with non-participating Member States or third countries.