The Implementation of Bail-In in Recent Resolution and State Aid Cases

07-07-2016

Since 1 January 2016 it is mandatory under the Bank Recovery and Resolution Directive (BRRD) to bail-in shareholders and creditors for a minimum amount of 8% of total liabilities before any funds from the Single Resolution Fund may be injected into a bank under resolution. A number of national competent authorities therefore triggered the resolution of weak banks before the deadline of 31 December 2015. However, since 2013 EU State aid rules have imposed (the "2013 Banking Communication") that subordinated creditors contribute to the maximum extent (bail-in) to the restructuring of State-aided institutions. All the resolution cases presented below and approved by the European Commission have complied with the State-aid requirement to bail-in subordinated creditors.

Since 1 January 2016 it is mandatory under the Bank Recovery and Resolution Directive (BRRD) to bail-in shareholders and creditors for a minimum amount of 8% of total liabilities before any funds from the Single Resolution Fund may be injected into a bank under resolution. A number of national competent authorities therefore triggered the resolution of weak banks before the deadline of 31 December 2015. However, since 2013 EU State aid rules have imposed (the "2013 Banking Communication") that subordinated creditors contribute to the maximum extent (bail-in) to the restructuring of State-aided institutions. All the resolution cases presented below and approved by the European Commission have complied with the State-aid requirement to bail-in subordinated creditors.