Resolution authorities

Single Resolution Mechanism

The Single Resolution Mechanism (SRM) is one of the pillars of the banking union, along with the Single Supervisory Mechanism and the European deposit insurance scheme (which remains pending). When needed, the SRM ensures the orderly resolution of failing significant and less significant institutions with minimal costs to taxpayers and the real economy.

The SRM comprises the national resolution authorities, the Single Resolution Board (SRB) and the Single Resolution Fund. It centralises the decision-making process for bank resolution in the European Union (EU) and ensures uniform practice in resolution financing.

Its main aims are to safeguard financial stability, minimise the impact of institutions’ individual crises on the system, limit the need for public financial support and ensure a level playing field for all euro area banks.

The SRM applies to all institutions covered by European banking supervision (sometimes referred to as the Single Supervisory Mechanism).

National Resolution Authorities

The Bank Recovery and Resolution Directive allows Member States to choose to either centralise resolution functions in a single resolution authority or assign them to multiple authorities. The latter choice was made in Spain, assigning the preventive resolution functions for credit institutions and investments firms to the Banco de España and the National Securities Market Commission, respectively. Executive resolution functions, for both types of institution, are the remit of the Spanish executive resolution authority (FROB). According to Law 11/2015, the resolution authorities must collaborate and provide each other with any information that may be needed in the exercise of their powers. To this end, the Banco de España and FROB signed a collaboration agreement on the recovery and resolution of credit institutions, which was published on 21 February 2018.[1] The Banco de España also coordinates and cooperates on the tasks assigned to it by the SRB regarding significant and cross-border less significant institutions and groups and Spanish subsidiaries of foreign groups.

• Institutions under the direct responsibility of the Banco de España  (12 KB). As the preventive resolution authority, the Banco de España is responsible for less significant institutions with no cross-border activities. In addition, the Banco de España collaborates with the SRB on the tasks it is assigned in relation to significant and cross-border less significant institutions and groups and Spanish subsidiaries of foreign groups, which are the SRB’s direct responsibility.

EU resolution authority

At EU level, Regulation (EU) No 806/2014 on the SRM (SRM Regulation) stipulates that the SRB is in charge of drafting resolution plans and adopting all decisions on the resolution of significant and cross-border less significant institutions and groups and Spanish subsidiaries of foreign groups within the euro area. Implementing these resolution actions, however, is the preserve of the national executive resolution authority. Nevertheless, the SRB can require national resolution authorities to prepare and submit, or help draw up, draft resolution plans for institutions under their remit and has indeed done so in the past with the Banco de España. 

• Institutions under the direct responsibility of the SRB: significant and cross-border less significant institutions and groups and Spanish subsidiaries of foreign groups.