Council of the European Union Agrees Mandate on Bank Crisis Management and Deposit Insurance Framework

The Council of the European Union has agreed on a negotiating mandate on the review of the crisis management and deposit insurance framework for banks. The proposals consist of three pieces of legislation, the proposed texts of which the Council has also published: (i) a proposed Directive amending the EU Bank Recovery and Resolution Directive regarding early intervention measures, conditions for resolution, and financing of resolution action; (ii) a proposed Regulation amending the Single Resolution Mechanism Regulation regarding early intervention measures, conditions for resolution, and funding of resolution action; and (iii) a proposed Directive amending the EU Deposit Guarantee Scheme Directive as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency. In its announcement, the Council highlights its proposals, including in relation to the public interest assessment, using the DGS funds to "bridge the gap" after the minimum requirement for own funds and eligible liabilities, allowing them to subsequently unlock an intervention of the Single Resolution Fund, the hierarchy of claims, preventative and alternative measures, extraordinary public financial support, and SRB governance. As the European Parliament adopted its position in first reading on April 24, 2024, interinstitutional negotiations may now begin.

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