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Bank recovery and resolution

The EU provides a framework for authorities to manage bank failures effectively.

What the EU is doing and why

A bank resolution occurs when authorities determine that, contrary to normal insolvency proceedings, resolution would better protect financial stability, depositors and minimise the recourse to public funds (so called public interest assessment).

To manage the bank's failure in an orderly manner, authorities use resolution tools that 

  • ensure the continuity of the bank's critical functions
  • maintain financial stability
  • restore the viability of parts or all of the bank – or transfer them to another bank

Meanwhile, any part of the bank that cannot be made viable again goes through normal insolvency proceedings.

After the 2007-2009 global financial crisis, the EU adopted a number of measures to harmonise and improve the tools for dealing with bank crises.

Policy making timeline

  1. 18 April 2023
    Legislative proposal - Bank recovery and resolution
  2. 20 May 2020
    Legislation - Bank recovery and resolution
  3. 23 November 2016
    Legislative proposal - Bank recovery and resolution

Relevant legislation