Crisis management
The main aim of the European framework for recovery and resolution of bank failures is to enable the management of failures of credit institutions, whatever their category or size, and of systemically important institutions in particular, without compromising the stability of the financial system and without making taxpayers bear the cost.
Recovery and resolution
The European framework comprises:
- preparatory and preventive measures, such as the obligation for institutions and authorities to prepare recovery plans (i.e. to prepare for the possibility of a bank facing serious difficulties) and resolution plans to avert financial difficulties or a bankruptcy situation;
- powers of early intervention to remedy problems before they become severe, such as powers for supervisors to require the replacement of management or to require an institution to implement a recovery plan or to divest activities or business lines that pose an excessive risk to its financial soundness;
- resolution tools, of which three transfer tools in order to transfer all or part of the institution or its activities to an acquirer, a bridge institution or an asset management vehicle and the bail-in tool.
Resolution Board
The Resolution Board, a body of the NBB, is designated as the national resolution authority authorized to apply the resolution tools and to exercise the resolution powers vis-à-vis the credit institutions in accordance with the Law of 25 April 2014 on the legal status and supervision of credit institutions.