ECB and SRB welcome the new legislative proposal on bank crisis management and deposit insurance framework

The European Commission has adopted in April a legislative proposal to adjust and further strengthen the EU's existing bank crisis management and deposit insurance (CMDI) framework, with a focus on medium sized and smaller banks. The EU's banking sector, which includes a strong crisis management framework, has become much more resilient in recent years due to increasing regulation after the Great Financial Crisis. Nowadays, Financial Institutions across the EU are better capitalised, have higher liquidity ration and are much tighter supervised than they were 15 years ago. However, there have been cases when failing medium-sized and smaller banks have been managed with solutions outside the resolution framework, sometimes involving bailouts instead of the bank's required internal resources or private, industry-funded safety nets (deposit guarantee schemes and resolution funds).

In this alert, you will read more about the internal frameworks small and medium-sized banks will have to prepare in order to mitigate Failing or Likely to Fail situations and how this new legislative proposal will impact them.